Glossary of Business Terms

Balance Sheet

A financial statement that reports a company’s assets, liabilities, and shareholder’s equity in a single point in time

Cash Flow

The net amount of money received by and transferred out of, a business

Commodity

Something useful or valued

Core Competency

Any capability or advantage that sets a company apart from its competitors

Financial Statement

Formal records of the financial activities of a company

Gross Profit

Business’s profit before subtracting expenses

Growth Phase

The stage in the life cycle of business characterized by profit and positive cash flow

Key Performance Indicators

Sometimes referred as KPI, are quantifiable standards for measuring the successes of a business

Law of Diminishing Returns

That point at which the amount of profits gained are less than the money or effort invested

Manufacturing-Sector Business

A company that produces a commodity rather than providing a service

Net Profit

Business’s gross profit less fixed costs

Operations Consultant

Provide support to companies with improving the efficiency of their value chain

Profit and Loss Statement

A financial statement that details a company’s revenue and expenses over a given time period

Return on Investment (ROI)

A ratio between net profit and the cost of resources in achieving the net profit 

Revenue

Income generated from normal business operations

Service-Sector Business

A company that provides a service rather than a commodity

Stock-in-Trade

The requisite materials or resources necessary to or used in a business

Taiichi Ohno

Father of the Toyota Production System, which inspired Lean manufacturing

Throughput Rate

The number of flow units (i.e. clients, files, blueprints, tax returns) going through the business workflow per unit time

Value Chain

The internal processes through which a company delivers value to clients

Workflow

The sequence of administrative processes through a piece of work passes from initiation to completion