10 Vital Monetary Terminologies every business owner should know

What are the major business terms that you have knowledge about? What are the most important terms in relation to finance that the business owners must have proper understanding about? What are the major marketing concepts that you need to know about while being in business? Can you share with us, the name of the most vital monetary terms which are taught in the business schools? Credit Health Care is here to help you to get familiarized with the necessary terminologies which are said to be very beneficial for the entrepreneur community.


Now, let us talk about the business terms which you need to use continuously while dealing with people in your own business venture as well as working a in a corporate house. In addition to that, there are many changes which are happening in the business segment in terms of management. It is very important for you to know that, all the people who are associated with business should be well aware of these jargons in order to shine in this sector. This is the second part of the business terms series of this blog. Do not forget to read the first part, where we have listed about the most important entrepreneurship related jargons. Next, this article provides an additional terms which includes capital, accounts receivable, business to consumer (B2C), profit margin, payback period, return on investment (ROI), liabilities, target market, income statement and also sales prospects.

10 Vital Monetary Terminologies every business owner should know

What are the top business jargons that you are not aware of? What are the things that you must have full understanding about, before you start your own business venture? What are the new entrepreneurship trends that you must have knowledge about in order to be successful in any corporate organization? I am starting out in the business sector, so can you guys help me with telling about the vital entrepreneur terminologies which are used generally in regular business transactions? If you are looking for the answer, it is time for you to rad the blogpost very thoroughly.


Do note that, in business finance terms, the money a business has in its accounts, assets and investments is known as capital. In business, there are two major types of capital which are namely called as debt and equity. These specific terms will also been explained later for you to get a better idea of the different marketing procedures which are in place.

In addition to that, capital is a term for financial assets or their financial value, as well as the tangible factors of production and facilities. Along with that, do remember that, capital efficiency is the relationship between how many expenses are incurred by the company to how much money is used to manufacture a good or service.

Accounts Receivable

For the next point, we are going to talk about accounts receivable in your business. The Accounts Receivable (A/R) is the amount a business is owed by its clients. Usually the client is notified by invoice of the amount owed, and if not paid, the debt is legally enforceable. Also, on a business balance sheet, accounts receivable is often logged as an asset.

In addition to that, the account receivable are amounts of money owed by customers to another entity for goods or services delivered or used on credit but not yet paid for by clients. For that very reason, you need to be aware of this very fact, while dealing with accounts in your business.

Business to Consumer (B2C)

The Business to consumer (B2C) refers to the transactions conducted directly between a company and consumers who are the end-users of its products or services. The business to consumer as a business model differs significantly from the business-to-business model, which refers to commerce between two or more businesses.

In addition to that, companies that sell directly to consumers can be referred to as B2C companies, the term became immensely popular during the dotcom boom of the late 1990s, when it was used mainly to refer to online retailers, as well as other companies that sold products and services to consumers through the internet.

Profit Margin

In simple terms, the ratio of profit divided by revenue displayed as a percentage is known as profit margin. Profit margin usually refers to the percentage of revenue remaining after all costs, depreciation, interest, taxes, and other expenses have been deducted.

In addition to that, you should have knowledge about the different forms of profit margin, which can be calculated. Unlike gross profit margin, net profit margin is a calculation that expresses the profitability of an entire company, not just a single product or service. It is also expressed in a percentage as the higher the number, the more profitable the company.

Payback Period

You must always keep in mind that payback period is the amount of time it takes to recover the initial investment of a business and the payback period of a given investment or project is an important determinant of whether to undertake the position or project, as longer payback periods are typically not desirable for investment positions.

In addition to that, the Payback Period helps to determine the length of time required to recover the initial cash outlay in the project. Along with that, payback period in capital budgeting refers to the period of time required to recoup the funds expended in an investment, or to reach the break-even point.

Return on Investment (ROI)

Do keep in mind that Return on Investment (ROI) is the amount money that a business gets in return from an investment. It can also be defined as the ratio between the net profit and cost of investment resulting from an investment of some resources. As a performance measure, ROI is used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments options which are available to the prospective investors.

In addition to that, to calculate ROI, the benefit or return of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio. ROI is usually expressed as a percentage and is typically used for personal financial decisions, to compare a company’s profitability or to compare the efficiency of different investments.

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You need to understand that liabilities includes any debt accrued by a business in the course of starting, growing and maintaining its operations, including bank loans, credit card debts, and monies owed to vendors and product manufacturers.

In addition to that, the liabilities can be divided into two major types which can be further classified into current, which refers to immediate debts such as money owed to suppliers and long-term debt, which refers to liabilities such as loans and accounts payable.

Target Market

You nned to be aware of the very fact that target market is a specific group of customers at which a company aims its products and services and as those buyers are likely to want or need a company’s offerings, it makes the most sense for the company to focus its marketing efforts on reaching them.

In addition to that, target market is the market a company wants to sell its products and services to, and it includes a targeted set of customers for whom it directs its marketing efforts. Also, identifying the target market is an essential step in the development of a marketing plan.

Income Statement

You must note that, the income statement is also known as a profit and loss statement. Also, an income statement shows the profitability of a business during a period of time. The income statement looks at revenues and expenses of a particular business through all of its activities.

In addition to that, the profit and loss statement is a financial report that provides a summary of a company’s revenues, expenses, and profits or losses over a period of time over a period of time. It is used for reporting a company’s financial performance over a specific accounting period, with the other two key statements being the balance sheet and the statement of cash flows.

Sales Prospect

Do keep in mind that the sales prospect is considered to be a potential customer. Also, these types of customers have also been qualified as fitting certain criteria. However, they are qualified on the basis of buying authority, financial capacity, and also willingness.

In addition to that, it is a true fact that, too many salespeople cannot identify a sales suspect from a genuine sales prospect. Also, the sales prospecting is when inside sales reps make outbound calls or send outbound emails to leads in hopes of creating opportunities for the company.

Things to Remember:

So now, the above monetary terms will help you to deal with your finances in a much more organized way. Moreover, many new terms are being developed with the modification of the business world in the recent times, so you need to be always be having the latest information with yourself. Along with that, in a earlier article, we did mention about the most-popular list of taxation related books as well as ebooks which are said to be useful to not only the people who are wanting to save tax money but also the new and old taxation professionals. Never forget to read the post till the end before coming back to this section to find more exciting monetary tricks and tips which are considered to be hugely beneficial. Thus, the time has arrived for those who want to gain maximum information in regard to monetary terminologies. however, you should not fail to provide your important feedback after learning about them in the below comments section!

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