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Business Terms everyone must know

Learning these business phrases will help you communicate and understand more effectively in the workplace.

Business Terms everyone must know
Photo credit: Ujwal Sharma

Here are some basic business terms one should know. Learning these business terms will improve your communication and understanding in the corporate world.

General Business Terms
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  • Ballpark: An estimate
  • Cash Cow: A cash cow is a mature slow-growth industrial company or business unit. Cash cows account for a significant portion of the market and require little investment. A good example would be Apple.
  • Run with it: Accepting or adopting something and putting it into practice with zeal.
  • Belly Up: Refers to a business organization that is ruined financially. 
  • In the red: Usually in accounting, outgoing funds are written in red ink. So when a company has a huge amount of debt it is said to be in the red.
  • B2B/B2C: B2B stands for business to business, it refers to a trade conducted between two businesses whereas B2C stands for business to customer and refers to a trade conducted between a business and a customer. 
  • Best Practice: The most efficient method of performing a task.
  • Collateral: Something given as security for the loan that will be forfeited if the borrower defaults.
  • Bankrupt: A person when declared by law, that he cannot pay his debts. 
  • Turnover: Simply means the sales of the organization. 
Finance Terms
Business Terms everyone must know
Photo credit: Ujwal Sharma
  • Balance Sheet: A balance sheet is a financial statement that shows a company’s assets and liabilities at a certain point in time. In a balance sheet, Assets = Liabilities. + Equity
  • Capital: Refers to the money bought into the business through debt( Loan) or through equity (Owners funds). 
  • Equity: The amount of capital invested by the owner of the company
  • Debt: Money borrowed by the organization from someone other than the owner. 
  • Leverage: The ratio of debt in the capital of the company. Higher the debt, higher the leverage.
  • EBIT: Stands for earning before interest and tax. Also referred to as operating profit or profit before interest and tax.
  • Cash Flow Statement: Is a detailed statement showing the amount of cash entering and leaving the company. Accompanies the Balance sheet and Income Statement in an annual report. 
  • Variable Cost: Costs that vary according to the amount of output. If the company does not produce any goods the variable cost will be zero.
  • Fixed Cost: Costs that do not vary according to the amount of output. A company will have to pay costs like rent and salary even if the level of production is zero.
  • Share: A share refers to a share in the share capital of a company. It represents the ownership in the company equal to the amount of the face value of the share.
Human Resource Terms
Human Resources Matter | LWM, WI
  • Benchmarking: Comparing the actual performance with a set standard.
  • Bumping: A practice of giving a senior employee who is about to be eliminated from a position another position in the same company to retain the knowledge and experience of the employee within the organization. 
  • Exit interview: An interview set between a leaving employee and the management to understand the reason for leaving the organization. 
  • Succession Planning: This is the process of establishing long-term requirements and developing an internal talent pool to meet those requirements. It aids in the identification, evaluation, and development of individuals who are critical to the organization’s strategy.
  • Pay Slip: Every month, after paying the employee’s wage for the services done during the month, the employer gives them a receipt.
  • Severance Pay: A severance package is a set of salary and perks that employees may be entitled to if they quit a job involuntarily.
  • Trade Union: A group of employees who have banded together to achieve common goals such as preserving the integrity of their craft, raising safety standards, and obtaining better wages and benefits.
  • Change Management: The process of sharing information regarding organizational changes, such as new mission or policy updates, new hiring or terminations, leadership and management changes, new workplace tools, and so on.
  • Growth Mindset: The concept that people are not born with a fixed set of skills, but rather may learn and earn new ones.

Hrushikesh Pachbudhe is a News Analyst and Author at Empire Weekly. He is an MBA aspirant and a finance enthusiast. He is a firm believer of “Quality over quantity”, strives towards improving himself every day, and is always eager to learn. He is an incredibly analytical person, yet his desire to explore his creative side led him to work in content writing and development. Amongst his peers, he is known for his punctuality, discipline, and reliability. He aspires to become a successful investor and tackle bigger responsibilities and challenges. Some of his hobbies involve playing football, listening to music, and weight training.

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