Trade Terms A - P

Above-the-line: In Marketing, relating to marketing expenditure on advertising in media such as press, radio, television, cinema, and the World Wide Web, on which a commission is usually paid to an agency.

Absorbed Account: An account that has lost its separate identity by being combined with related accounts in the preparation of financial statement. 

Absorbed Business: A company that has been merged into another company. 

Absorbed costs: The indirect costs associated with manufacturing, for example, insurance or property taxes. 

Absorption costing: An accounting practice in which fixed and variable costs of production are absorbed by different cost centers. 

Abusive tax shelter:  A  tax shelter that somebody claims illegally to avoid or minimize tax 

Accelerated cost recovery system: A  system used in computing the depreciation of some assets acquired before 1986 in a way that reduces taxes. 

Accelerated depreciation: A system used for computing the depreciation of some assets in a way that assumes that they depreciate faster in the early years of their acquisition. 

Access bond: A type of mortgage that permits borrowers to take out loans against extra capital paid into the account, home-loan interest rates being lower than interest rates on other forms of credit.  

Account: A record of a business transaction. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged.  

Accounting cost:  the cost of maintaining and checking the business records of a person or organization and the preparation of forms and reports for financial purposes. 

Accounting insolvency: A the condition that a company is in when its liabilities to its creditors exceeds its assets. 

Account balance: The difference between the debit and the credit sides of an account.

Accountant: One who is skilled at keeping business records. Usually, a highly trained professional rather than one who keeps books. An accoun­tant can set up the books needed for a business to operate and help the owner understand them.

Accounting period: A time interval at the end of which an analysis is made of the information contained in the bookkeeping records. Also the period of time covered by the profit and loss statement.

Accounts payable: Money which you owe to an individual or business for goods or services that have been received but not yet paid for.  

Accounting rate of return: the ratio of profit before interest and taxation to the percentage of capital employed at the end of a period. Variations include using profit after interest and taxation, equity capital employed, and average capital for the period. 

Accounts receivable: Money owed to your business for goods or ser­vices that have been delivered but not yet paid for.  

Accounts receivable factoring: the buying of accounts receivable at a discount with the aim of making a profit from collecting them. 

Accrual basis: A method of keeping accounts that shows expenses incurred and income earned for a given fiscal period, even though such expenses and income have not been actually paid or received in cash.

Actuary: A professional expert in pension and life insurance matters, particularly trained in mathematical, statistical, and accounting methods and procedures, and in insurance probabilities.

Administrative expense: Expenses chargeable to the managerial, general administrative and policy phases of a business in contrast to sales, manufacturing, or cost of goods expense.

Advertising: The practice of bringing to the public's notice the good qualities of something in order to induce the public to buy or invest in it.

Agent: A person who is authorized to act for or represent another person in dealing with a third party.

Amortization: To liquidate on an installment basis; the process of grad­ually paying off a liability over a period of time.

Analysis: Breaking an idea or problem down into its parts; a thorough examination of the parts of anything.

Annual report: The yearly report made by a company at the close of the fiscal year, stating the company's receipts and disbursements, assets and liabilities.

Appraisal: Evaluation of a specific piece of personal or real property. The value placed on the property evaluated.

Appreciation: The increase in the value of an asset in excess of its depreciable cost due to economic and other conditions, as distinguished from increases in value due to improvements or additions made to it.

Arrears: Amounts past due and unpaid.

Articles of Incorporation: A legal document filed with the state that sets forth the purposes and regulations for a corporation. Each state has different regulations.

Assets: Anything of worth that is owned. Accounts receivable are an asset.

Audiotaping: The act of recording onto an audiotape.

Audit: An examination of accounting documents and of supporting evidence for the purpose of reaching an informed opinion concerning their propriety.


Back-to-back loan: an arrangement in which two companies in different countries borrow offsetting amounts in each other's currency and each repays it at a specified future date in its domestic currency. Such a loan, often between a company and its foreign subsidiary, eliminates the risk of loss from exchange rate fluctuations.  

Back office:  the administrative staff of a company who do not have face-to-face contact with the company's customers.  

Back pay: pay that is owed to an employee for work carried out before the current payment period and is either overdue or results from a backdated pay increase.  

Backup:  a period in which bond yields rise and prices fall, or a sudden reversal in a stock market trend.  

Bad debts: Money owed to you that cannot be collected.

Balance: The amount of money remaining in an account.  

Balanced budget: a budget in which planned expenditure on goods and services and debt income can be met by current income from taxation and other central government receipts.  

Balanced investment strategy: a strategy of investing in a variety of types of companies and financial instruments to reduce the risk of loss through poor performance of any one type.  

Balance of payments: a list of a country's credit and debit transactions with international financial institutions and foreign countries in a specific period. 

Balance of trade: the difference between a country's exports and imports of goods and services. 

Balance sheet: An itemized statement that lists the total assets and total liabilities of a given business to portray its net worth at a given moment in time.

Ballpark:  an informal term for a rough, estimated figure. The term was derived from the approximate assessment of the number of spectators that might be made on the basis of a glance around at a sporting event. 

Bank card:  a plastic card issued by a bank and accepted by merchants in payment for transactions. The most common types are credit cards and debit cards, although smart cards have been introduced. Bank cards are governed by an internationally recognized set of rules for the authorization of their use and the clearing and settlement of transactions.  

Banker's draft:  a bill of exchange payable on demand and drawn by one bank on another. Regarded as being equivalent to cash, the draft cannot be returned unpaid.

Bank guarantee:  a commitment made by a bank to a foreign buyer that the bank will pay an exporter for goods shipped if the buyer defaults.   

Bank statement: A monthly statement of account which a bank renders to each of its depositors.  

Bankruptcy: the condition of being unable to pay debts, with liabilities greater than assets.  

Barren money: money that is unproductive because it is not invested.  

Benchmarking: Rating your company's products, services and prac­tices against those of the front-runners in the industry.  

Bill of entry: A statement of the nature and value of goods to be imported or exported, prepared by the shipper and presented to a customhouse.  

Bill of lading: A statement of the nature and value of goods being transported, especially by ship, along with the conditions applying to their transportation. Drawn up by the carrier, this document serves as a contract between the owner of the goods and the carrier.

Bill of sale: Formal legal document that conveys title to or interest in specific property from the seller to the buyer.

Black market: an illegal market, usually for goods that are in short supply. Black market trading breaks government regulations or legislation and is particularly prevalent during times of shortage, such as rationing, or in industries that are very highly regulated, such as pharmaceuticals or armaments.

Board of directors: Those individuals selected to sit on an authoritative standing committee or governing body, taking responsibility for the management of an organization. Members of the board of directors are officially chosen by the shareholders, but in practice they are usually selected on the basis of the current board's recommendations. The board usually includes major shareholders as well as directors of the company.  

Board of Trustees: a committee or governing body that takes responsibility for managing, and holds in trust, funds, assets, or property belonging to others, for example, charitable or pension funds or assets.  

Bookkeeping: The process of recording business transactions into the accounting records. The "books" are the documents in which the records of transactions are kept.

Bottom line: The figure that reflects company profitability on the income statement. The bottom line is the profit after all expenses and taxes have been paid.

Brand: A design, mark, symbol or other device that distinguishes one line or type of goods from those of a competitor.

Brand name: A term, symbol, design or combination thereof that iden­tifies and differentiates a seller's products or service.

Break-even: The point of business activity when total revenue equals total expenses. Above the break-even point, the business is making a profit. Below the break-even point, the business is incurring a loss.

Budget: An estimate of the income and expenditures for a future period of time, usually one year.

Business venture: Taking financial risks in a commercial enterprise.  


Capital: Money available to invest or the total of accumulated assets available for production.  

Capital account: the sum of a company's capital at a particular time

Capital allowance: the tax advantage that a company is granted for money that it spends on fixed assets.

Capital appreciation: the increase in a company's or individual's wealth.   

Capital asset: an asset that is difficult to sell quickly. for example, real estate.

Capital budget: a budget for the use of a company's money. 

Capital controls: regulations placed by a government on the amount of capital residents may hold.   

Capital equipment: Equipment that you use to manufacture a product, provide a service or use to sell, store and deliver merchandise. Such equipment will not be sold in the normal course of business, but will be used and worn out or consumed in the course of business.

Capital gains (and losses): The financial gain made upon the disposal of an asset. The gain is the difference between the cost of its acquisition and net proceeds upon its sale.  

Capital goods: stocks of physical or financial assets that are capable of generating income.  

Capital inflow: the amount of capital that flows into an economy from services rendered abroad.

Capitalism: an economic and social system in which individuals can maximize profits because they own the means of production. 

Capitalist: an investor of capital in a business. 

Capitalization: the amount of money invested in a company or the worth of the bonds and stocks of a company. 

Cash: Money in hand or readily available.

Cash discount: A deduction that is given for prompt payment of a bill.

Cash flow: The actual movement of cash within a business; the analysis of how much cash is needed and when that money is required by a busi­ness within a period of time.

Cash receipts: The money received by a business from customers.  

Centralization: the gathering together, at a corporate headquarters, of specialist functions such as finance, personnel and information technology. Centralization is usually undertaken in order to effect economies of scale and to standardize operating procedures throughout the organization. Centralized management can become cumbersome and inefficient and may produce communication problems. Some organizations have shifted toward decentralization to try to avoid this.

Certificate: A document representing partial ownership of a company that states the number of shares that the document is worth and the names of the company and the owner of the shares. 

Certified Public Accountant: An accountant to whom a state has given a certificate showing that he has met prescribed requirements designed to insure competence on the part of the public practitioner in accounting and that he is permitted to use the designation Certified Public Accountant, commonly abbreviated as CPA.

Chamber of Commerce: An organization of business people designed to advance the interests of its members. There are three levels: national, state and local.  

Chief Executive: the person with overall responsibility for ensuring that the daily operations of an organization run efficiently and for carrying out strategic plans. The chief executive of an organization normally sits on the board of directors. In a limited company, the chief executive is usually known as a managing director. 

Chief Executive Officer: the highest ranking executive officer within a company or corporation, who has responsibility for over-all management of its day-to-day affairs under the supervision of the board of directors. Abbr. CEO 

Chief financial officer: the officer of the organization responsible for handling finds, signing checks, the keeping of financial records, and financial planning of the company. 

Choice: A decision to purchase that is based on an evaluation of alternatives.  

Clicks and brick: a business strategy that involves combining the traditional retail outlets with online commerce. 

Close corporation: a public corporation in which all of the voting stock is held by a few shareholders, for example, management or family members. Although it is a public company, shares would not normally be available for trading because of a lack of liquidity.  

Close-end credit: a loan, plus any interest and finance charges, that is to be repaid in full by a specified future date. Loans that have real estate or motor vehicles as collateral are usually closed-end. 

Collateral: property or goods used as security against a loan and forfeited to the lender if the borrower defaults.  

Co-signers: Joint signers of a loan agreement who pledge to meet the obligations of a business in case of default.

Commercial paper: uncollateralized loans obtained by companies, usually on a short-term basis. 

Commission: A percentage of the principal or of the income that an agent receives as compensation for services.

Contract: An agreement regarding mutual responsibilities between two or more parties.

Controllable expenses: Those expenses that can be controlled or restrained by the business person.

Corporation: A voluntary organization of persons, either actual indi­viduals or legal entities, legally bound together to form a business enter­prise; an artificial legal entity created by government grant and treated by law as an individual entity.

Cost of goods sold: The direct cost to the business owner of those items which will be sold to customers.

Credit: Another word for debt. Credit is given to customers when they are allowed to make a purchase with the promise to pay later. A bank gives credit when it lends money.

Credit line: The maximum amount of credit or money a financial insti­tution or trade firm will extend to a customer.

Current assets: Valuable resources or property owned by a company that will be turned into cash within one year or used up in the operations of the company within one year. Generally includes cash, accounts receivable, inventory and prepaid expenses.

Current liabilities: Amounts owned that will ordinarily be paid by a company within one year. Generally includes accounts payable, current portion of long-term debt, interest and dividends payable


Debt: That which is owed. Debt refers to borrowed funds and is gener­ally secured by collateral or a co-signer.

Debt capital: The part of the investment capital that must be borrowed. Default: The failure to pay a debt or meet an obligation.

Deficit: The excess of liabilities over assets; a negative net worth.

(Deficit financing: The borrowing of money because expenditures will exceed receipts. 

Deficit spending: government spending financed by borrowing rather than taxation. 

Deflation: a reduction in the general level of prices sustained over several months, usually accompanied by declining employment and output. 

Depreciation: A decrease in value through age, wear or deterioration. Depreciation is a normal expense of doing business that must be taken into account. There are laws and regulations governing the manner and time periods that may be used for depreciation.

Desktop publishing: Commonly used term for computer-generated printed materials such as newsletters and brochures.  

Devaluationa reduction in the official fixed rate at which one currency exchanges for another under a fixed-rate regime, usually to correct a balance of payments deficit. 

Development capital: finance for the expansion of an established company. 

Differentiated marketing: Selecting and developing a number of offer­ings to meet the needs of a number of specific market segments.  

Direct cost: Ma variable cost directly attributable to production. Items that are classed as direct cost include materials used, labor deployed, and marketing budget, and amounts spent will vary with output. 

Direct mail: Marketing goods or services directly to the consumer through the mall. Direct mail is one tool that can be used as part of a marketing strategy. The use of direct mail is often administered by third-party companies that own databases containing not only names and addresses, but also social, economic, and lifestyle information. It is sometimes seen as an invasion of personal privacy, and there is some public resentment of this form of advertising. This is particularly true of e-mailed direct mail, known derogatively as SPAM.

Direct selling: The process whereby the producer sells to the user, ultimate consumer or retailer without intervening middlemen such as wholesalers, retailers, or brokers. Direct selling offers many advantages to the customer, including lower prices and shopping from home. Potential disadvantages include the lack of after-sales service, an inability to inspect products prior to purchase, lack of specialist advice, and difficulties in returning or exchanging goods.

Dirty price: the price of a debt instrument that includes the amount of accrued interest that has not yet been paid.  

Discount: A deduction from the stated or list price of a product or service in relation to the standard price. A discount is a selling technique to encourage customers to buy and is offered for a variety of reasons: for buying in quantity or for repeat buying; as a special offer to move a slow-moving line or for paying by cash, etc.

Distribution channel: All of the individuals and organizations involved in the process of moving products from producer to consumer. The route a product follows as it moves from the original grower, producer or importer to the ultimate consumer.

Distributor: Middleman, wholesaler, agent or company distributing goods to dealers or companies.

Downsize: Term currently used to indicate employee reassignment, lay­offs and restructuring in order to make a business more competitive, effi­cient, and/or cost-effective.  



earnings: a sum of money gained from employment, usually quoted before tax, including extra reward such as fringe benefits, allowances, or incentives. In business, income or profit from a business, quoted gross or net of tax, which may be retained and distributed in part to the shareholders.

e-business: the conduct of business on the Internet, including the electronic purchasing and selling of goods and services, servicing customers, and communications with business partners. 

e-commerce: the exchange of goods, information products, or services via an electronic medium such as the Internet. 

: A venture characterized  by innovation, creativity, dynamism, and risk. An enterprise can consist of one project, or may refer to an entire organization.  

Entrepreneur: An innovator of business enterprise who recognizes opportunities to introduce a new product, a new process or an improved organization, and who raises the necessary money, assembles the factors for production and organizes an operation to exploit the opportunity.  

equal opportunities: the granting of equal rights. privileges, and status regardless of gender, age, race, religion, disability, or sexual orientation. Equality in employment is regulated by law in most Western countries. 

equipment: Physical property of a more or less permanent nature ordi­narily useful in carrying on operations, other than land, buildings or improvements to either of them. Examples are machinery, tools, tracks, cars, ships, furniture and furnishings.

equity: A financial investment in a business. An equity investment car­ries with it a share of ownership of the business, a stake in the profits and a say in how it is managed. Equity is calculated by subtracting the lia­bilities of the business from the assets of the business.

equity capital: Money furnished by owners of the business.  

ergonomics:  the study of workplace design and the physical and psychological impact it has on workers. Ergonomics is about the fit between people, their work activities, equipment, work systems, and environment to ensure that workplaces are safe, comfortable, efficient, and that productivity is not compromised.  

Euro:  the currency of 12 member nations of the European Union. The Euro was introduced in 1999, when the first 11 countries to adopt it joined together in an Economic and Monetary Union and fixed their currencies' exchange rate to the Euro. Notes and coins were brought into general circulation in January 2002, although banks and other financial institutions had before that time carried out transactions in Euros.

: The process by which two or more parties give something of value to one another to satisfy needs and wants.

exchange controls: The regulations by which a country's banking system controls its residents' or resident companies' dealings in foreign currencies and gold. 

exchange rate: The rate at which one country's currency can be exchanged for that of another. 

excise duty: a tax on goods such as alcohol or tobacco produced and sold within a particular country. 

expense account: amount of money that an employee or group of employees can draw on to reclaim personal expenses incurred in carrying out activities for an organization. 

Expenses: personal costs incurred by an employee in carrying out activities for an organization that are reimbursed by the employer.  

Export agent: an intermediary who acts on behalf of a company to open up or develop a market in a foreign country. Export agents are often paid a commission on all sales and may have exclusive rights in a particular geographic  area. 

Exporting: the process of selling goods to other countries.


Facsimile machine (FAX): Machine capable of transmitting written input via telephone lines.  

Factor: a variable investigated in a statistical study.  

Feasibility study: an investigation into a proposed plan or project to determine whether and how it can be successfully and profitably carried out.  

Federal funds: an deposits held in reserve by the Federal Reserve System. 

Feedback: the communication of responses and reactions to proposals and changes or to the findings of performance appraisals with the aim of enabling improvements to be made.

FIFO: FIRST IN FIRST OUT, a method of inventory control where the stock of a given product first placed in store is used before more recently produced or acquired goods or materials.

Finance: the money needed by an individual or company to pay for something, for example, a project or stocks.  

Financial statements: Documents that show your financial situation.  

Fiscal: relating to financial matters, especially in respect to government collection, use. and regulation of money through taxation.

Fixed asset: a long term asset of a business such as a machine or building that will not usually be traded.  

Fixed expenses: Those costs which don't vary from one period to the next. Generally, these expenses are not affected by the volume of business.  

Float: The period between the presentation of a check as payment and the actual payment to the payee. 

Floating rate: an interest rate that is not fixed and which changes according to fluctuations in the market 

: a lower limit on an interest rate, price, or the value of an asset. 

Flow chart: a graphic representation of the stages in a process or system or the steps required to solve a problem.  

Forecast: a prediction of the value of a variable in a statistical study

Forward pricing: the establishment of the price of a share in a mutual fund based on the next asset valuation.

Forward rate: an estimate of what an interest rate will be at a specified future time.

Franchise: an agreement enabling a third party to sell or provide products or services owned by a manufacturer or supplier. The franchise is regulated by a franchise contract, or franchise agreement, that specifies the terms and conditions of the franchise.  

Franchise chain: a number of retail outlets operating the same franchise. A franchise chain may vary in size from a few to many thousands of outlets and in coverage from a small local area to worldwide. 

Fraud: the use of dishonesty, deception. or false representation in order to gain a material advantage or to injure the interest of others.

: a product or service that is given away, often as a business promotion. 

Free enterprise: the trade carried on in a free-market economy, where resources are allocated on the basis of supply and demand. 

Free market: a market in which supply and demand are unregulated except by the country's competition policy, and rights in physical and intellectual property are upheld. 

: the process of responding to customer inquiries, orders, or sales promotion offers. 

: a contract to deliver a commodity at a future date. 

Futures market
: a market for buying and selling securities, commodities, or currencies that tend to fluctuate in price over a period of time. The market's aim is to reduce the risk of uncertainty about future prices.

Fundraising: Events staged to raise revenue.  



gap analysis: a marketing technique used to identify gaps in market or product coverage. In gap analysis, consumer information or requirements are tabulated and matched to product categories in order to identify product or service opportunities or gaps in product planning.  

gateway: E-Commerce: a point where two or more computer networks meet and can exchange data.  

GDP: Gross domestic product, the total flow of services and goods produced by an economy over a quarter or a year, measured by the aggregate value of services and goods at market prices.  

Globalization: the process of tailoring products or services to different local markets around the world.  

GNP: Gross National Product, GDP plus domestic resident's income from investment abroad less income earned in the domestic market accruing to noncitizens abroad.  

Gross profit: The difference between the selling price and the cost of an item. Gross profit is calculated by subtracting cost of goods sold from net sales.  

Growth capital: funding that allows a company to accelerate its growth. For new startup companies, growth capital is the second stage of funding after seed money. 

Growth rate: the rate of an economy's growth as measured by its technical progress, the growth of its labor, and the increase in its capital stock. .  

Guarantee: A pledge by a third party to repay a loan in the event that the borrower defaults.

Guarantor: a person or organization that guarantees repayment of a loan if the borrower defaults or is unable to pay.

Guerilla marketing: A marketing technique, the aim of which is to damage the market share of competitors.  


Hard sell: a heavily persuasive and highly pressured approach used to sell a product or service.  

Hedge fund: a mutual fund that takes considerable risks, including heavy investment in unconventional instruments, in the hope of generating great profits.  

High end: relating to the most expensive, most advanced, or most powerful in a range of things, for example, computers. 

High-pressure: a selling technique in which the sales representative attempts to persuade a buyer very forcefully and persistently.  

Holding company: a parent organization that owns and controls other companies.  

Home page: The "table of contents" to a Web site, detailing what pages are on a particular site. The first page one sees when accessing a Web site.  

Horizontal integration: The merging of functions or organizations that operate on a similar level. Horizontal integration involves the union of companies producing the same kinds of goods or operating at the same stage of the supply chain.  

Hyperinflation: very rapid growth in the rate of inflation so that money loses value and physical goods replace currency as a medium of exchange. 


IMF: International Monetary Fund, the organization that industrialized nations have established to reduce trade barriers and stabilize currencies, especially those of less industrialized nations.  

Impaired capital: a company's capital that is worth less than the par value of its stock.  

Import: a product or service brought into another country from its country of origin either for sale or for use in manufacturing.  

Incentive program: an award or reward scheme designed to improve sales force or retail performance.  

Income redistribution: a government policy that seeks to restrain increases in wages or prices by regulating the permitted level of increase. 

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.  

Income tax: a tax levied directly on the income of a person or a company and paid to the local, state, or federal government.  

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.  

Indirect channel: the selling and distribution of products to customers through intermediaries such as wholesalers, distributors, agents, dealers, or retailers.  

Indirect cost: a fixed or overhead cost that cannot be attributed directly to the production of a particular item and is incurred even when there is no output.  

Inflation: a sustained increase in a country's general level of prices that devalues its currency, often caused by excess demand in the economy. 

Infomercial: a television or cinema commercial that includes helpful information about a product as well as advertising content. 

Initial public offering: the first instance of making particular shares available for sale to the public.  

Insolvency: the inability to pay debts when they become due. Insolvency will apply even if total assets exceed total liabilities, if those assets cannot be readily converted into cash to meet debts as they mature. Even then, insolvency may not necessarily mean business failure. Bankruptcy may be avoided through debt rescheduling or turnaround management.  

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.  

Insurance: an arrangement in which individuals or companies pay another company to guarantee them compensation if they suffer loss resulting from risks such as fire, theft, or accidental damage.

Intellectual property: the ownership of rights to ideas, designs, and inventions, including copyrights, patents, and trademarks. Intellectual property is protected by law in most countries, and the World Intellectual Property Organization is responsible for harmonizing the law across different countries and promoting protection of intellectual property rights. 

Interest: the rate that a lender charges for the use of money that is a loan. 

Interest rate: the amount of interest charged for borrowing a particular sum of money over a specified period of time.  

Income statement: A financial document that shows how much money (revenue) came in and how much money (expense) was paid out.  

Internet: The vast collection in inter-connected networks that provide electronic mail and access to the World Wide Web.

Inventory: A list of assets being held for sale, The stock of finished goods, raw materials, and work in progress held by a company.

Invest: To lay out money for any purpose from which a profit is expected.  

Investment: The spending money on stocks, shares, and other securities, or on assets such as plant and machinery. 

Invisible exports: the profits, dividends, interest, and royalties received from selling a country's services abroad. 

Invoice: a document that a supplier sends to a customer detailing the cost of products or services supplied and requesting payment.  


joint account: an account, for example, one held at a bank or by a broker, that two or more people own in common and have access to.  

joint ownershipownership by more than one party, each with equal rights in the item owned. Joint ownership is often applied to property or other assets.  

junk bond: a bond with high return and high risk.  


keystone: Setting a retail price at twice the wholesale price.


Labor force: people of working age who are available for paid employment, including the unemployed looking for work, but excluding categories such as full-time students, careers, and the long-term sick and disabled.   

Lapse: the termination of an option without trade in the underlying security or commodity

Law of diminishing returns: a rule stating that as one factor of production is increased while others remain constant, the extra output generated by the additional input will eventually fall. The law of diminishing returns therefore means that extra workers, extra capital, extra machinery, or extra land may not necessarily raise output as much as expected. 

lemon: a product, especially a car, that is defective in some way.  

Letter of agreement: a document that constitutes a simple form of contract. 

Letter of Credit: a letter issued by a bank that can be presented to another bank to authorize the issue of credit or money.

Leverage: a method of corporate funding in which a higher proportion of funds is raised through borrowing than share issue.

Liability: a debt that has no claim on a debtor's assets or less claim than another debt.

Liability insurance: Risk protection for actions for which a business is liable.

License: a contractual arrangement, or a document representing this, in which one organization gives another the rights to produce, sell, or use something in return for payment.

Lifestyle: A pattern of living that comprises an individual's activities, interests and opinions.

Limited partnership: A legal partnership where some owners are allowed to assume responsibility only up to the amount invested.  

Liquid assets: financial assets that can be quickly converted to cash. 

Liquidity: The ability of a business to meet its financial responsibilities. The degree of readiness with which assets can be converted into cash without loss.

Loan agreement: A document that states what a business can and can­not do as long as it owes money to the lender.

Loan: Money lent with interest.

Long-term liabilities: The liabilities (expenses) that will not mature within the next year.



Ma and Pa shop: a small family-run business.  

Macroeconomics:  the branch of economics that studies national income and the economic systems of national economies.  

Mail order: a form of retailing in which consumers order products from a catalogue for delivery to their home.  

management: the use of professional skills for identifying and achieving organizational objectives through the deployment of appropriate resources. The art of conducting and supervising a business.

market: A set of potential or real buyers or a place in which there is a demand for products or services. Actual or potential buyers of a product or service.  

marketable: possessing the potential to be commercially viable.  

market analysis: the study of a market to identify and quantify business opportunities. 

market development: marketing activities designed to increase the overall size of a market through education and awareness.

market demand: Total volume purchased in a specific geographic area by a specific customer group in a specified time period under a specified marketing program.

Market forecast: An anticipated demand that results from a planned marketing expenditure.  

Marketing: one of the main management disciplines, encompassing all the strategic planning, operations, activities, and processes involved in achieving organizational objectives by delivering value to customers. Marketing management focuses on satisfying customer requirements by identifying needs and wants.  

Market niche: A well-defined group of customers for which what you have to offer is particularly suitable.

Market positioning: Finding a market niche that emphasizes the strengths of a product or service in relation to the weaknesses of the competition.

market share: A company's percentage share of total sales within a given market.

market targeting: Choosing a marketing strategy in terms of competi­tive strengths and marketplace realities.

marketing mix: The set of product, place, promotion, price and pack­aging variables, which a marketing manager controls and orchestrates to bring a product or service into the marketplace.

marketing research: The systematic design, collection, analysis and reporting of data regarding a specific marketing situation.  

markup: the difference between the cost of a product or service and its selling price. 

mass marketing: Selecting and developing a single offering for an entire market.

merchandise: Goods bought and sold in a business. "Merchandise" or stock is a part of inventory.

microbusiness: An owner-operated business with few employees and less than $250,000 in annual sales.  

micromarketing: marketing to individuals or very small groups.  

middleman: A person or company that performs functions or renders services involved in the purchase and/or sale of goods in their flow from producer to consumer.  

multilevel sales: Also known as network marketing. Rather than hiring sales staff, multilevel sales companies sell their products through thou­sands of independent distributors. Multilevel sales companies offer dis­tributors commissions on both retail sales and the sales of their "down-line" (the network of other distributors they sponsor).  


NASDAQ:  National Association of Security Dealers Automated Quotation system, a screen-based quotation system supporting market making in registered equities.  

negotiation: a discussion with the aim of resolving a difference of opinion, or dispute, or to settle the terms of an agreement or transaction.      

net assets: the amount by which the value of a company's assets exceeds its liabilities. 

net capital: the amount by which assets exceed the value of assets not easily converted to cash. 

net cash balance: the amount of cash that is on hand.  

net errors and omissions: the net amount of the discrepancies that arise in calculations of balances of payments.  

net fixed assets: the value of fixed assets after depreciation.  

net margin: the percentage of revenues that is profit.

net operating income: the amount by which income exceeds expenses, before considering taxes and interest 

net proceeds: the amount realized from a transaction minus the cost of making it. 

net profit: gross profit minus costs.

net worth: The total value of a business in financial terms. Net worth is calculated by subtracting total liabilities from total assets.

niche: A well-defined group of customers for which what you have to offer is particularly suitable.  

no-load fund: a mutual fund that does not charge a fee for purchase or sale of shares.  

nondisclosure agreement: a legally enforceable agreement preventing present or past employees from disclosing commercially sensitive information belonging to the employer to any other party.  

nonrecurring: One time, not repeating. "Nonrecurring" expenses are those involved in starting a business, and which only have to be paid once and will not occur again.

note: A document that is recognized as legal evidence of a debt.


objective: an end toward which effort is directed and on which resources are focused, usually to achieve an organization's strategy. 

obsolescence: the decline of products in a market due to the introduction of better competitor products or rapid technology developments.  

open-end credit: a form of credit that does not have an upper limit on the amount that can be borrowed or a time limit before repayment is due. 

open market: a market that is widely available.  

operating cash flow: the amount used to represent the money moving through a company as a result of its operations, as distinct from its purely financial transactions. 

operating costs: Expenditures arising out of current business activities. The costs incurred to do business such as salaries, electricity, rental. Also may be called "overhead."  

optimize: to allocate such things as resources or capital as efficiently as possible. 

option: a contract for the right to buy or sell an asset, typically a commodity, under certain terms.

order: a contract made between a customer and a supplier for the supply of a range of goods or services in a determined quantity and quality, at an agreed price, and for delivery at or by a specified time.  

organizational market: A marketplace made up of producers, trade industries, governments and institutions.

outsourcing: Term used in business to identify the process of sub-contracting work to outside vendors. The transfer of the provision of services previously carried out by in-house personnel to an external organization, usually under a contract with agreed standards, costs, and conditions.

overdraft: the amount by which the money withdrawn from a bank account exceeds the balance of the account. 

overdraft facility: a credit arrangement with a bank, allowing a person or company with an account to use borrowed money up to an agreed limit when nothing is left in the account. 

: in debt to a bank because the amount withdrawn from an account exceeds its balance. 

outsourcing: Term used in business to identify the process of sub-contracting work to outside vendors

overhead: A general term for costs of materials and services not directly adding to or readily identifiable with the product or service being sold.  

Overprice: to set the price of a product or service too high, with the result that it is unacceptable to the market


partnership: A legal business relationship of two or more people who share responsibilities, resources, profits and liabilities.  

(passive investment management: the managing of a mutual fund or other investment portfolio by relying on automatic adjustments such as indexation instead of making personal judgments.  

patent: a type of copyright granted as a fixed-term monopoly to an inventor by the state to prevent others copying an invention, or improvement  of a product or process.

payable: Ready to be paid. One of the standard accounts kept by a book­keeper is "accounts payable." This is a list of those bills that are current and due to be paid.  

payment gateway: a company or organization that provides an interface between merchant's point-of-sale system, acquirer payment systems, and issuer payment systems.  

payment-in-kind: an alternative form of pay given to employees in place of monetary reward but considered to be of equivalent value. A payment in kind take the form of a car, purchase of goods at cost price, or other nonfinancial exchange that benefits an employee.

Pay Pal : a Web based service that enables Internet users to send and receive payments electronically. To open a Pay Pal account, users register and provide their credit card details. When they decide to make a transaction via Pay Pal, their card is charged for the transfer.

perception: The process of selecting, organizing and interpreting infor­mation received through the senses.  

perfomance appraisal: a face-to-face discussion in which one employee's work is discussed, reviewed, and appraised by another, using an agreed and understood framework.

petty cash: a small store of cash used for minor business expenses.

phantom income: income that is subject to tax even though the recipient never actually gets control of it, for example, income from a limited partnership. 

pink slip: get your pink slip to be dismissed from employment

piracy: illegal copying of a product such as software or music.

placement fee: a fee that a stockbroker receives for a sale of shares.

planning: the process of setting objectives, or goals, and formulating policies, strategies, and procedures to meet them.

poaching: the practice of recruiting people from other companies by offering inducements.

point of purchase: the place at which a product is purchased by the customer. The point of sale can be a retail outlet, a display case, or even a  legal business relationship of two or more people who share responsibilities, resources, profits and liabilities.

postdate: to put a later date on a document or check than the date when it is signed, with the effect that it is not valid until the later date.

prebilling: the practice of submitting a bill for a product or service before it has actually been delivered.

prepaid expenses: Expenditures that are paid in advance for items not yet received.  

prepaid interest: interest paid in advance of its due date.

prepayment penalty: a charge that may be levied against somebody who makes a payment before its due date. The penalty compensates the lender or seller for potential lost interest.

price: The exchange value of a product or service from the perspective of both the buyer and the seller.

price ceiling: The highest amount a customer will pay for a product or a service based upon perceived value.  

price control: government regulations that set maximum prices for commodities or control price levels by credit controls.

price discrimination: the practice of selling of the same product to different buyers at different prices.

price floor: The lowest amount a business owner can charge for a prod­uct or service and still meet all expenses.

price planning: The systematic process for establishing pricing objec­tives and policies.  

price war: a situation in which two or more companies each try to increase their own share of the market by lowering prices.

principal: The amount of money borrowed in a debt agreement and the amount upon which interest is calculated.  

probability: the quantitative measure of the likelihood that a given event will occur.

probation: a trial period in the first months of employment when the employer checks the suitability and capability of a person in a certain role, and takes any corrective action. 

producers: The components of the organizational market that acquire products, services that enter into the production of products and services that are sold or supplied to others.

product: Anything capable of satisfying needs, including tangible items, services and ideas.

Product life cycle (PLC): The stages of development and decline through which a successful product typically moves.

product line: A group of products related to each other by marketing, technical or end-use considerations.

product mix: All of the products in a seller's total product line.

Profit and Loss Statement: A list of the total amount of sales (rev­enues) and total costs (expenses). The difference between revenues and expenses is your profit or loss.

profit: Financial gain, returns over expenditures.

profit margin: The difference between your selling price and all of your costs.  

pro-forma: A projection or estimate of what may result in the future from actions in the present. A pro forma financial statement is one that shows how the actual operations of the business will turn out if certain assumptions are achieved.; a document issued before all relevant details are known,