Small Business Encyclopedia
A measure of the extent to which a firm's capital is provided by owners or lenders, calculated by dividing debt by equity. Also, a measure of a company's ability to repay its obligations. If ratios are increasing--more debt in relation to equity--the company is being financed by creditors rather than by internal positive cash flow which may be a dangerous trend.
Expenditures for business items that have no future life (such as rent, utilities or wages) and are incurred in conducting normal business activities which a business owner may deduct from gross earned income for federal tax purposes
An expense item set up to express the diminishing life expectancy and value of any equipment (including vehicles). Depreciation is set up over a fixed period of time based on current tax regulation. Items fully depreciated are no longer carried as assets on the company books.
The manner in which goods move from the manufacturer to the outlet where the consumer purchases them; in some marketplaces, it's a very complex channel, including distributors, wholesaler, jobbers and brokers.
Doing Business As (DBA)
The operating name of a company, as opposed to the legal name of the company. Some states require DBA or fictitious business name filings to be made for the protection of consumers conducting business with the entity.
An arrangement between a business and the manufacturer or distributor of a product the business wishes to sell in which the manufacturer or distributor--and not the business--ships the product to the business's customers
A reasonable investigation of a proposed investment deal and of the principals offering it before the transaction is finalized to check out an investment's worthiness; generally performed by the investor's attorney and accountant.