Glossary · 136 terms
Accounting, in plain English
Plain-English definitions of the accounting, bookkeeping, and finance terms that matter for your business.
A
Accounting EquationThe accounting equation (Assets = Liabilities + Equity) is the core rule of double-entry bookkeeping. It shows that everything a business owns is funded either by what it owes or by what its owners have put in, and it keeps the balance sheet in balance.Accounting for Income TaxesAccounting for income taxes covers how a business records the tax it owes for the current period and the future tax effects of timing differences, using current tax expense, deferred tax assets and deferred tax liabilities under standards such as IAS 12 and ASC 740.Accounting for Inventory ObsolescenceAccounting for inventory obsolescence is the process of writing down stock that can no longer be sold or used at its full value, so the balance sheet shows inventory at the lower of cost and net realisable value and the loss is recorded in the period it occurs.Accounting for Stock-Based CompensationAccounting for stock-based compensation is how a company records the cost of paying employees with shares, share options or restricted stock, measuring the award at fair value on the grant date and expensing it over the vesting period under IFRS 2 or ASC 718.Accounts PayableAccounts payable (AP) is the money a business owes its suppliers for goods or services bought on credit, recorded as a current liability on the balance sheet until the bill is paid, and a key driver of cash flow and supplier relationships.Accounts ReceivableAccounts receivable (AR) is the money customers owe a business for goods or services already delivered on credit, recorded as a current asset on the balance sheet and turned into cash through invoicing, follow-up and collection.Accounts Receivable TurnoverAccounts receivable turnover is a ratio that measures how many times a year a business collects its average receivables, calculated as net credit sales divided by average accounts receivable, and shows how quickly customers pay their invoices.Accrual BasisThe accrual basis of accounting records revenue when it is earned and expenses when they are incurred, regardless of when cash changes hands, giving a truer picture of performance and forming the basis of IFRS and GAAP financial statements.Accrued ExpensesAccrued expenses are costs a business has incurred but not yet paid or been invoiced for by the end of a period, such as wages, interest or utilities, recorded as a current liability so the expense lands in the right period under accrual accounting.Accrued IncomeAccrued income is revenue a business has earned but not yet invoiced or received by the end of a period, such as interest, rent or completed work, recorded as a current asset so income is recognised in the period it was earned.Accumulated DepreciationAccumulated depreciation is the total depreciation charged on a fixed asset since it was bought, held in a contra-asset account that reduces the asset's cost on the balance sheet to show its net book value.Adjusted EBITDAAdjusted EBITDA is earnings before interest, taxes, depreciation and amortisation, further adjusted to remove one-off, non-cash or non-operating items, used by owners, lenders and investors to compare a company's underlying operating profitability.Adjusted Gross Income (AGI)Adjusted gross income (AGI) is a US tax term for total gross income minus specific allowed adjustments, such as retirement contributions and self-employment tax, and is the starting point for working out deductions, credits and taxable income.Allowance for Doubtful AccountsThe allowance for doubtful accounts is a contra-asset that estimates how much of a company's accounts receivable will never be collected, reducing receivables to the amount the business realistically expects to receive and recording bad debt expense in the right period.AmortizationAmortization is the gradual spreading of a cost or balance over time, either expensing an intangible asset such as software, patents or licences over its useful life, or paying down a loan through scheduled instalments of principal and interest.Amortization ScheduleAn amortization schedule is a table showing each payment on a loan over its life, splitting every instalment into interest and principal and tracking the remaining balance, so borrowers can plan cash flow and record loan payments correctly.AssetAn asset is a resource a business controls as a result of past events that is expected to bring future economic benefit, such as cash, inventory, receivables, equipment or intellectual property, and it is reported on the balance sheet as current or non-current.
B
Bad DebtBad debt is money owed to a business that it no longer expects to collect, such as an unpaid customer invoice from a client who has gone out of business, written off as an expense to reduce accounts receivable to what is genuinely recoverable.Balance SheetA balance sheet is a financial statement that shows what a business owns (assets), what it owes (liabilities) and the owners' stake (equity) at a single point in time, built on the accounting equation and used to judge liquidity, solvency and financial health.Bank ReconciliationA bank reconciliation is the process of matching the cash balance in a company's books against its bank statement, explaining every difference such as uncleared cheques, deposits in transit and bank fees, to confirm cash is accurate and catch errors or fraud.Book ValueBook value is the value of an asset or a whole company as recorded in its accounts, calculated as cost minus accumulated depreciation for an asset, or total assets minus total liabilities for a company, and often compared with market value.BookkeepingBookkeeping is the day-to-day recording and organising of a business's financial transactions, including sales, purchases, receipts and payments, in a structured set of accounts so that accurate financial statements, tax returns and management reports can be produced.Break-Even PointThe break-even point is the level of sales at which total revenue equals total costs, so a business makes neither a profit nor a loss, calculated as fixed costs divided by contribution margin per unit and used for pricing, planning and risk decisions.BudgetA budget is a financial plan that estimates a business's income and expenses for a future period, usually a year broken into months, used to set targets, allocate resources, control spending and compare actual results against plan.Budgeting VarianceA budgeting variance is the difference between a budgeted figure and the actual result for revenue or costs, labelled favourable or unfavourable, and analysed to explain performance, correct course and improve future forecasts.Burn RateBurn rate is the speed at which a company spends its cash reserves, usually measured per month, and is a key metric for startups and loss-making businesses because it shows how long the cash will last before more funding or profitability is needed.Business ExpensesBusiness expenses are the ordinary and necessary costs of running a business, such as rent, salaries, software, travel and marketing, recorded in the income statement to calculate profit and, where tax rules allow, deducted to reduce taxable income.
C
Capital Expenditure (CapEx)Capital expenditure (CapEx) is money a business spends to buy, upgrade or extend the life of long-term assets such as property, equipment, vehicles and software, recorded on the balance sheet and spread over time through depreciation rather than expensed at once.Cash Flow StatementA cash flow statement is a financial statement that shows how cash moved in and out of a business over a period, split into operating, investing and financing activities, and explains the change between opening and closing cash balances.Chart of AccountsA chart of accounts is the organised list of every account a business uses to record transactions, grouped into assets, liabilities, equity, income and expenses with codes, and forms the structure of the general ledger and financial reports.Cost of Goods Sold (COGS)Cost of goods sold (COGS) is the direct cost of producing or buying the products a business sold during a period, including materials, direct labour and production overheads, and is subtracted from revenue to calculate gross profit.Credit NoteA credit note is a document a seller issues to a customer to reduce or cancel the amount owed on a previous invoice, used for returns, overcharges, discounts or cancelled services, and it reverses revenue and any sales tax already charged.Current RatioThe current ratio is a liquidity ratio that compares a company's current assets with its current liabilities, calculated as current assets divided by current liabilities, to show whether it can pay debts due within the next 12 months.
D
Debit and CreditDebits and credits are the two sides of every accounting entry in double-entry bookkeeping; a debit is recorded on the left and a credit on the right, and whether each increases or decreases an account depends on the account type.Deferred RevenueDeferred revenue, also called unearned revenue, is cash a business receives before it delivers the goods or services, recorded as a liability and recognised as revenue only as the obligation is fulfilled, common with subscriptions, deposits and prepaid contracts.DepreciationDepreciation is the systematic allocation of a tangible fixed asset's cost over its useful life, recorded as an expense each period to reflect wear and tear or obsolescence, using methods such as straight-line or declining balance.DividendA dividend is a distribution of a company's profits to its shareholders, usually paid in cash per share, declared by the board out of retained earnings, and recorded as a reduction of equity rather than an expense.Double-Entry BookkeepingDouble-entry bookkeeping is the accounting system in which every transaction is recorded in at least two accounts, with equal debits and credits, keeping the accounting equation in balance and making errors easier to detect.
E
Earnings Per Share (EPS)Earnings per share (EPS) is the portion of a company's net profit attributable to each ordinary share, calculated as net income available to ordinary shareholders divided by the weighted average number of shares, and is a key measure of profitability for investors.EBITDAEBITDA stands for earnings before interest, taxes, depreciation and amortisation, a widely used measure of operating profitability that strips out financing, tax and non-cash charges so businesses with different capital structures can be compared.EquityEquity is the owners' residual interest in a business after all liabilities are deducted from assets, made up of capital invested and retained earnings, and shown as shareholders' or owner's equity on the balance sheet.ExpenseAn expense is a cost a business incurs to generate revenue during a period, such as wages, rent, utilities or materials, recognised in the income statement when incurred under accrual accounting and reducing profit and equity.
F
Fair ValueFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, as defined by IFRS 13, and is used to measure investments, derivatives and assets in acquisitions.Financial StatementsFinancial statements are the formal reports that summarise a business's financial performance and position, chiefly the income statement, balance sheet, cash flow statement and statement of changes in equity, together with explanatory notes.Fiscal YearA fiscal year is the 12-month accounting period a business or government uses for financial reporting and tax, which may follow the calendar year or end on another date that better suits the business cycle.Fixed AssetA fixed asset is a long-term tangible resource such as land, buildings, machinery, vehicles or computers that a business owns and uses to generate income for more than one year, recorded at cost on the balance sheet and depreciated over its useful life.Free Cash Flow (FCF)Free cash flow (FCF) is the cash a business generates from operations after paying for capital expenditure, calculated as operating cash flow minus CapEx, and shows how much cash is genuinely available for debt repayment, dividends or growth.
G
General LedgerThe general ledger is the master record of all a business's accounts, holding every posted transaction with debits and credits and running balances, and it's the source for the trial balance and financial statements.Going ConcernGoing concern is the accounting assumption that a business will keep operating for the foreseeable future, at least 12 months, without needing to liquidate, and it underpins how assets and liabilities are measured in financial statements.GoodwillGoodwill is an intangible asset that arises when one business buys another for more than the fair value of its identifiable net assets, representing things like brand, reputation, customer relationships and workforce, and it is tested for impairment rather than amortised under IFRS.Gross ProfitGross profit is revenue minus the cost of goods sold, showing how much a business earns from its products or services before overheads, and gross profit margin expresses it as a percentage of revenue to measure pricing and production efficiency.
H
Hire PurchaseHire purchase is a financing arrangement where a business pays for an asset such as a vehicle or machinery in instalments, using it straight away and gaining ownership once the final payment is made, recorded as an asset with a matching liability.Historical CostHistorical cost is the accounting principle of recording assets at the original price paid to acquire them, including costs to get them ready for use, rather than at their current market value, providing reliable and verifiable figures on the balance sheet.Holding CompanyA holding company is a business that owns controlling stakes in other companies, called subsidiaries, rather than producing goods or services itself, used to manage a group, protect assets and simplify ownership and investment.Hurdle RateA hurdle rate is the minimum rate of return a business requires before it will invest in a project, often based on its cost of capital plus a risk premium, and is used to accept or reject investments and compare opportunities.
I
ImpairmentImpairment is a permanent reduction in the value of an asset, recognised when its carrying amount on the balance sheet exceeds its recoverable amount, and recorded as an impairment loss in the income statement.Income StatementAn income statement, also called a profit and loss (P&L) statement, is a financial statement that shows a business's revenue, expenses and resulting profit or loss over a period such as a month, quarter or year.Interest Coverage RatioThe interest coverage ratio measures how easily a business can pay interest on its debt from operating profit, calculated as EBIT divided by interest expense, and is widely used by lenders to assess credit risk.Inventory TurnoverInventory turnover is a ratio that shows how many times a business sells and replaces its stock in a period, calculated as cost of goods sold divided by average inventory, and indicates how efficiently inventory is managed.InvoiceAn invoice is a commercial document a seller sends to a buyer listing the goods or services supplied, quantities, prices, taxes, payment terms and due date, creating a record of the sale and a request for payment.
J
Job CostingJob costing is a cost accounting method that tracks the materials, labour and overheads used on each individual job, project or order, so a business can price work accurately and see the profit or loss on every job.Joint VentureA joint venture is a business arrangement in which two or more parties pool resources and share control over a specific project or entity, sharing profits, losses and risks, and it is accounted for under IFRS 11 using the equity method in most cases.Journal EntryA journal entry is the record of a business transaction in the accounting books, listing the date, the accounts debited and credited, the amounts and a description, and it is the first step before posting to the general ledger.Just-in-Time Inventory (JIT)Just-in-time (JIT) inventory is a stock management approach where materials and goods are ordered and received only when they are needed for production or sale, reducing storage costs, waste and cash tied up in inventory.
K
Key Performance Indicators (KPIs)Key performance indicators (KPIs) are measurable values that show how well a business is achieving its most important objectives, such as revenue growth, gross margin, cash runway or customer retention, tracked over time against targets.Key Person InsuranceKey person insurance is a life or disability policy a business takes out on an owner or employee whose loss would seriously harm the company, paying the business a sum to cover lost profits, recruitment costs or debt repayment.KitingKiting is a form of fraud that exploits the time it takes for cheques or payments to clear, moving money between accounts to create a false balance, and it is most often seen as cheque kiting between banks.Know Your Customer (KYC)Know Your Customer (KYC) is the process banks, payment providers and other regulated businesses use to verify the identity of customers and assess their risk, helping prevent money laundering, fraud and terrorist financing.
L
Lease AccountingLease accounting is how a business records leased assets such as offices, vehicles and equipment; under IFRS 16 most leases put a right-of-use asset and a lease liability on the balance sheet, with depreciation and interest replacing rent expense.LiabilityA liability is a present obligation of a business to transfer economic resources, such as cash, goods or services, as a result of past events, including loans, supplier bills, taxes and customer deposits, reported as current or non-current on the balance sheet.Line of CreditA line of credit is a flexible borrowing facility that lets a business draw funds up to an agreed limit whenever it needs them, repay and borrow again, paying interest only on the amount used, and is commonly used to smooth cash flow.LiquidityLiquidity is a business's ability to meet its short-term obligations with cash or assets that can be quickly converted to cash, measured with ratios such as the current ratio, quick ratio and cash ratio.Long-Term DebtLong-term debt is borrowing that a business does not have to repay within the next 12 months, such as term loans, bonds, mortgages and long-term lease liabilities, reported as a non-current liability with the portion due within a year shown as current.
M
MarkupMarkup is the amount added to the cost of a product or service to set its selling price, usually expressed as a percentage of cost, and it differs from margin, which is profit expressed as a percentage of the selling price.Matching PrincipleThe matching principle is the accounting rule that expenses should be recorded in the same period as the revenues they help generate, regardless of when cash is paid, and it is a cornerstone of accrual accounting.MaterialityMateriality is the accounting and auditing concept that information is significant if omitting or misstating it could reasonably influence the decisions of users of financial statements, judged by both the size and nature of an item.Month-End CloseMonth-end close is the process of reviewing, reconciling and adjusting a business's accounts at the end of each month so that the books are accurate and complete and reliable financial statements can be produced.
N
Net IncomeNet income, often called net profit or the bottom line, is what remains of a business's revenue after subtracting all expenses, including cost of sales, operating costs, interest and taxes, and it is the final figure on the income statement.Net Profit MarginNet profit margin is the percentage of revenue a business keeps as profit after all expenses, interest and taxes, calculated as net income divided by revenue, and is a key measure of overall profitability and cost control.Net Realisable Value (NRV)Net realisable value (NRV) is the estimated selling price of an asset in the normal course of business minus the expected costs to complete and sell it, used mainly to measure inventory at the lower of cost and NRV.Non-Current LiabilitiesNon-current liabilities are obligations a business does not need to settle within the next 12 months, such as long-term loans, bonds, lease liabilities, deferred tax and long-term provisions, and they show how the business is financed over the long term.
O
Opening BalanceAn opening balance is the amount in an account at the start of an accounting period or when a business begins using a new accounting system, carried forward from the previous period's closing balance.Operating Cash Flow (OCF)Operating cash flow (OCF) is the cash a business generates from its normal day-to-day operations in a period, shown in the first section of the cash flow statement, and it reveals whether core trading brings in more cash than it uses.Operating Expenses (OpEx)Operating expenses (OpEx) are the day-to-day costs of running a business that aren't directly tied to producing goods, such as rent, salaries, marketing, utilities, software and insurance, deducted from gross profit to calculate operating profit.OverheadOverhead refers to the ongoing indirect costs of running a business that can't be traced to a specific product, service or job, such as rent, utilities, insurance, admin salaries and software, and must be covered by gross profit.Owner's DrawAn owner's draw is money a sole proprietor or partner takes out of their business for personal use, recorded as a reduction of owner's equity rather than a business expense, and it isn't the same as a salary.
P
PayrollPayroll is the process of calculating and paying employees' wages and salaries, deducting income tax, pension and social security contributions, paying those amounts to the authorities and keeping the required records and reports.Petty CashPetty cash is a small amount of physical cash a business keeps on hand to pay for minor expenses such as office supplies, postage or refreshments, controlled through a fund, receipts and regular reconciliation.Prepaid ExpensesPrepaid expenses are payments a business makes in advance for goods or services it will use in future periods, such as insurance, rent or software subscriptions, recorded as a current asset and expensed gradually as the benefit is used.ProvisionA provision is a liability of uncertain timing or amount, such as a warranty claim, legal case or restructuring cost, recognised when a business has a present obligation from a past event, an outflow is probable and the amount can be reliably estimated.Purchase Order (PO)A purchase order (PO) is a document a buyer sends to a supplier to formally request goods or services, specifying items, quantities, prices, delivery dates and terms, and once accepted it becomes a binding agreement.
Q
Qualified OpinionA qualified opinion is an auditor's report stating that a company's financial statements are fairly presented except for a specific, material but not pervasive issue, such as a disagreement over an accounting treatment or a limit on audit evidence.Quality of EarningsQuality of earnings describes how reliable, sustainable and cash-backed a company's reported profits are, and a quality of earnings (QoE) report is an in-depth review used in acquisitions and investments to test whether profits reflect real, repeatable performance.Quarterly Financial ReportA quarterly financial report is a set of financial statements covering a three-month period, used by listed companies to meet regulatory requirements and by private businesses to track performance, cash and progress against budget during the year.Quick RatioThe quick ratio, or acid-test ratio, measures a business's ability to pay its current liabilities using only its most liquid assets, such as cash, marketable securities and receivables, excluding inventory and prepaid expenses.
R
Recurring RevenueRecurring revenue is predictable income a business expects to receive regularly from ongoing customer relationships, such as subscriptions, retainers or service contracts, often measured as monthly recurring revenue (MRR) or annual recurring revenue (ARR).Retained EarningsRetained earnings are the cumulative net profits a company has kept in the business rather than paid out as dividends since it started, shown in the equity section of the balance sheet and used to fund growth, repay debt or absorb losses.Return on Investment (ROI)Return on investment (ROI) is a profitability ratio that measures the gain or loss from an investment relative to its cost, calculated as net return divided by investment cost, and is used to compare projects, marketing spend and assets.RevenueRevenue is the total income a business earns from selling goods or services in its normal operations during a period, before any expenses are deducted, and it appears as the top line of the income statement.Revenue RecognitionRevenue recognition is the accounting principle that sets when and how much revenue a business records, under IFRS 15 and ASC 606 following a five-step model that recognises revenue as performance obligations are satisfied and control passes to the customer.
S
Sales TaxSales tax is a consumption tax charged at the point of sale on goods and some services, collected by the seller from the customer and paid over to the tax authority, and unlike VAT it is usually charged only once, at the final sale to the consumer.Sole ProprietorshipA sole proprietorship is an unincorporated business owned and run by one person, where there is no legal separation between the owner and the business, so the owner keeps all profits, pays personal tax on them and is personally liable for all debts.SolvencySolvency is a business's ability to meet all of its long-term financial obligations, shown when total assets exceed total liabilities and cash flows can cover debt payments, and it is assessed with ratios such as debt-to-equity and interest coverage.Straight-Line DepreciationStraight-line depreciation is the simplest and most common depreciation method, spreading the cost of a fixed asset evenly over its useful life by charging the same expense each year, calculated as cost minus residual value divided by useful life.Sunk CostA sunk cost is money already spent that can't be recovered whatever decision is made next, and good business decisions ignore sunk costs and focus only on future costs and benefits to avoid the sunk cost fallacy.
T
Tax DeductionA tax deduction is an expense or allowance that can be subtracted from income to reduce the amount of income that is taxed, such as business expenses, depreciation allowances and pension contributions, lowering the final tax bill.Tax Identification Number (TIN)A tax identification number (TIN) is a unique number issued by a tax authority to identify an individual or business for tax purposes, required to file returns, issue tax invoices, open business bank accounts and deal with government agencies.Transfer PricingTransfer pricing is the setting of prices for goods, services, loans and intellectual property traded between related companies in the same group, which tax authorities require to follow the arm's length principle so profits are taxed where value is created.Trial BalanceA trial balance is a list of all general ledger accounts and their debit or credit balances at a point in time, used to check that total debits equal total credits and as the starting point for preparing financial statements.TurnoverTurnover has two main meanings in business: in the UK and many Commonwealth countries it means total revenue or sales for a period, and in ratio analysis it measures how quickly assets such as inventory, receivables or staff are replaced.
U
Undeposited FundsUndeposited funds is a temporary holding account used in bookkeeping for customer payments that have been received but not yet deposited into the bank, letting several payments be grouped so they match the single deposit shown on the bank statement.Unit EconomicsUnit economics are the revenues and costs of a business measured on a per-unit basis, such as per customer, order or product, used to check whether each sale or customer is profitable and whether the business model can scale.Unrealized Gain or LossAn unrealized gain or loss is the change in value of an asset or liability that a business still holds, such as shares, foreign currency balances or investments, recorded on paper but not yet locked in by a sale or settlement.Useful LifeUseful life is the period over which a business expects to use a fixed or intangible asset, or the number of units it expects the asset to produce, and it determines how the asset's cost is spread through depreciation or amortisation.
V
ValuationValuation is the process of estimating what a business, asset or share is worth, using approaches such as discounted cash flow, comparable company multiples or net asset value, for purposes including fundraising, sale, tax and financial reporting.Value Added Tax (VAT)Value added tax (VAT) is a consumption tax charged at each stage of the supply chain on the value added, where registered businesses charge output VAT on sales, reclaim input VAT on purchases and pay the difference to the tax authority.Variable CostA variable cost is a business expense that changes in direct proportion to production or sales volume, such as raw materials, packaging, shipping and sales commissions, and it's central to break-even analysis and pricing decisions.Vertical AnalysisVertical analysis is a method of financial statement analysis where each line item is shown as a percentage of a base figure, such as revenue on the income statement or total assets on the balance sheet, making it easy to compare cost structures across periods and companies.VoucherIn accounting, a voucher is a document that supports and authorises a transaction, such as a payment, receipt or journal entry, bundling the invoice, approval and payment details to provide an audit trail.
W
Weighted Average Cost (Inventory)Weighted average cost is an inventory valuation method that assigns every unit the same average cost, calculated by dividing the total cost of goods available for sale by the total units available, smoothing out price changes in cost of goods sold.Weighted Average Cost of Capital (WACC)The weighted average cost of capital (WACC) is the average rate of return a company must pay to all its providers of finance, weighting the cost of equity and the after-tax cost of debt by their share of total capital, and it is widely used as a discount rate in valuations and investment decisions.Withholding TaxWithholding tax is income tax that a payer deducts at source from a payment, such as salaries, dividends, interest, royalties or contractor fees, and pays directly to the tax authority on behalf of the recipient, who can usually credit it against their own tax.Working CapitalWorking capital is the difference between a business's current assets and current liabilities, showing the short-term resources available to run day-to-day operations, and managing it well keeps cash flowing between paying suppliers and collecting from customers.Write-OffA write-off is the accounting action of reducing the value of an asset to zero or removing it from the books because it has no further value, such as an uncollectable customer debt, damaged inventory or an abandoned project, with the loss recorded as an expense.
X
X-InefficiencyX-inefficiency is an economic concept describing the gap between how efficiently a business could operate and how it actually operates, usually because weak competitive pressure lets costs, waste and poor management practices build up.XBRL (eXtensible Business Reporting Language)XBRL (eXtensible Business Reporting Language) is an open, XML-based standard for tagging financial statement data so it can be read and analysed by computers, used by regulators, stock exchanges and tax authorities worldwide for digital financial reporting.XIRRXIRR is a spreadsheet function and method that calculates the annualised internal rate of return for a series of cash flows occurring on irregular dates, making it ideal for measuring real-world investment returns where deposits, withdrawals and payouts don't follow a fixed schedule.XML E-InvoicingXML e-invoicing is the exchange of invoices as structured XML data files rather than PDFs or paper, allowing them to be processed automatically by accounting systems and, in many countries, validated in real time by the tax authority.
Y
Year-End CloseYear-end close is the process of finalising a business's accounts at the end of its fiscal year, completing adjustments, reconciliations and closing entries, so annual financial statements and tax returns can be prepared and the books are ready for the new year.Year-to-Date (YTD)Year-to-date (YTD) refers to the period from the start of the current fiscal or calendar year up to the present date, and YTD figures for revenue, profit, expenses or returns are used to track progress against annual targets and prior years.YieldYield is the income an investment generates over a period, such as interest or dividends, expressed as a percentage of its cost or current market value, and it's used to compare the earning power of bonds, shares, property and savings.Yield to Maturity (YTM)Yield to maturity (YTM) is the total annualised return an investor can expect from a bond if it's held until it matures and all payments are made as scheduled, taking into account the purchase price, coupon payments and repayment of face value.
Z
Z-Score (Altman)The Altman Z-score is a formula that combines five financial ratios to estimate the likelihood that a company will go bankrupt within two years, classifying businesses into safe, grey and distress zones based on profitability, leverage, liquidity and activity.ZakatZakat is an obligatory annual Islamic contribution, generally 2.5% of qualifying wealth held above a minimum threshold (nisab) for a lunar year, and in some countries such as Saudi Arabia businesses must calculate and pay it to the tax authority alongside or instead of income tax.Zero-Based Budgeting (ZBB)Zero-based budgeting (ZBB) is a budgeting method where every expense must be justified from scratch for each new period, starting from a base of zero instead of last year's figures, to cut waste and direct spending toward priorities.Zero-Rated SupplyA zero-rated supply is a sale of goods or services that is taxable for VAT or GST but charged at a 0% rate, such as exports and certain basic foods or medical items, letting the seller reclaim input VAT on related purchases.
See Tyms on your own numbers
Get your books, reports and tax in one place.