Small Business Encyclopedia
Letter: D

Debt Financing

A method of financing in which a company receives a loan and gives its promise to repay the loan

Debt-to-Equity Ratio

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.

Deductible Expenses

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

Delegation

The assignment to others of the authority for particular functions, tasks and decisions

Demographics

A statistical view of a population, generally including age, gender, income, schooling, occupation and so on

Depreciation

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.

Direct Mail

A marketing effort that uses a mail service to deliver a promotional printed piece to your target audience

Direct Public Offering (DPO)

A situation in which a company sells its shares directly to the public without the help of underwriters

Direct Response TV Advertising

A marketing effort that encourages the target audience to respond directly to the advertiser: through the telephone, a business reply card, a coupon and so on

Discrimination Policy

A document that outlines your company policies in regards to discrimination in hiring and management practices

Distribution Models

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.

Distributors

Individuals or businesses that purchase the right to sell ABC Corp.'s products but not the right to use ABC's trade name

Diversification

A risk-reduction strategy that involves adding product, services, location, customers and markets to your company's portfolio

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.

Dollar-Cost Averaging

To invest, as in shares of stock, fixed amounts of money at regular intervals so as to buy more at lower prices ad less at higher prices

Drop Shipping

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

Due Diligence

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.

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