adminBalance Sheet: Along with three other reports relating to the financial health of your small business, the balance sheet is essential information that gives a “snapshot” of the company’s net worth at any given time. The report is a summary of the business assets and liabilities.
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Financial Leverage: Financial leverage which is also known as leverage or trading on equity, refers to the use of debt to acquire additional assets.
The use of financial leverage to control a greater amount of assets (by borrowing money) will cause the returns on the owner’s cash investment to be amplified.
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Depreciation: The value of any asset can be said to depreciate when it loses some of that value in increments over time. Depreciation occurs due to wear and tear.
Various methods of depreciation are used by businesses to decrease the recorded value of assets.
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Statement of Shareholders’ Equity: If you have chosen to fund your small business with equity financing and you have established shares and shareholders as part of the controlling interests, you are obligated to provide a financial report that shows changes in the equity section of your balance sheet.
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Bootstrapping: Using your own money to finance the start-up and growth of your small business. Think of it as being your own investor. Once the business is up and running successfully, the business finance term and definition bootstrapping refers to the use of profits earned to reinvest in the business.
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Debt Consolidation: If your small business has several loans with various payments, you might want to consider a business debt consolidation loan.
It is a process that lets you combine multiple loans into a single loan. The advantages are possibly reducing the interest rates on the borrowed funds as well as lowering the total amount you repay each month. Businesses use this tool to help improve cash flow.
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Accrual Basis: The accrual basis of accounting is an accounting method of recording income when it’s actually earned and expenses when they actually occur.
Accrual basis accounting is the most common approach used by larger businesses to record and maintain financial transactions.
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Accruals: A business finance term and definition referring to expenses that have been incurred but haven’t yet been recorded in the business books. Wages and payroll taxes are common examples. — www.fundera.com.
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