Basic Financial Concepts

Gross Margin

• The total revenue generated by a company.

• The difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage.

• The total expenses incurred by a company.

• The profit made after all expenses have been deducted from revenue.

Dividend

• A portion of a company's earnings distributed to shareholders, usually in the form of cash or additional stock.

• A type of investment that guarantees a fixed return.

• A fee paid to brokers for executing trades.

• A tax imposed on corporate profits.

Working Capital

• The total amount of cash a company has on hand.

• The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of a company.

• The total value of a company's fixed assets.

• The amount of money a company owes to its shareholders.

Balance sheets

• A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

• A report that details a company's cash flow over a specific period.

• A document that outlines a company's revenue and expenses for a fiscal year.

• A summary of a company's market share and competitive position.

Break - Even

• The point at which total revenues equal total costs, resulting in neither profit nor loss.

• The point at which total revenues exceed total costs, resulting in profit.

• The point at which total costs exceed total revenues, resulting in loss.

• The point at which total revenues are double the total costs, resulting in maximum profit.

Assets

• Resources owned by a company that have economic value and can provide future benefits.

• Liabilities that a company owes to external parties.

• Expenses incurred by a company during its operations.

• Investments made by a company in other businesses.

Return on Equity (ROE)

• A measure of financial performance calculated by dividing net income by shareholders' equity.

• A ratio that measures a company's ability to pay its short-term obligations.

• A metric used to evaluate the efficiency of a company's management in generating profits from its assets.

• A calculation that compares a company's total revenue to its total expenses.

Profit & Loss

• A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time, usually a fiscal quarter or year.

• A report that only includes the total revenue generated by a company.

• A document that lists all the assets and liabilities of a business at a specific point in time.

• A summary of cash inflows and outflows over a specific period.

Current Ratio

• A profitability ratio that measures a company's ability to generate profit from its assets.

• A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

• A solvency ratio that assesses a company's long-term financial stability.

• A leverage ratio that indicates the proportion of debt used in a company's capital structure.

Income Statement

• A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.

• A document that outlines a company's assets and liabilities at a specific point in time.

• A report that summarizes the cash inflows and outflows of a company over a period.

• A statement that details the equity changes in a company over a fiscal year.