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Financial Management

Cash Float Accounts

Definition: A bank account specifically set up by a business owner to float money through from Business A to enhance the perceived value of Business B
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Cost-Benefit Analysis

Definition: A process by which you weigh expected costs against expected benefits to determine the best (or most profitable) course of action
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Assets

Definition: The value of any tangible property and property rights owned by a company less any reserves set aside for depreciation. Assets don't reflect any appreciation in value unless they're sold for the greater value.
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Debt-to-Equity Ratio

Definition: 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.
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Deductible Expenses

Definition: 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
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Break-Even Analysis

Definition: A technique for analyzing how revenue, expenses and profit vary with changes in sales volume
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Budgeting

Definition: Establishing a planned level of expenditures, usually at a fairly detailed level. A company may plan and maintain a budget on either an accrual or a cash basis.
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Intangible Assets

Definition: The assets you cannot touch or see but that have value. Intangible assets include franchise rights, goodwill, noncompete agreements and patents, among others.
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Invoices

Definition: An itemized list of goods shipped or services rendered, stating quantities, prices, fees, shipping charges, etc. Also known as a "bill."
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Payables Management

Definition: The administration of a company's outstanding debts, or liabilities, to vendors for purchases of goods and services made on credit
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Undercapitalization

Definition: The condition that exists when a company doesn't have enough cash to carry on its business and pay its creditors
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Net Worth

Definition: The amount of equity a company has, which is the difference between its total assets and total liabilities.
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