Financial terms for entrepreneurs explained
Tips 'n tricks about the web, digital trends, and online marketing
Keep a grip on your operations
As a business owner, you need to understand a number of financial terms and concepts to keep a grip on your operations.
In this article, we would like to help you with some important concepts that you should definitely understand.
Key financial terms
What is a Balance Sheet?
The balance is an overview of what you own (assets) and what you owe (liabilities) at a specific time.
What does Assets mean?
Assets are property or rights that represent value to your business, such as machinery, buildings, debtors, stocks and cash.
What does Passiva mean?
Liabilities represents your company's debts or liabilities, such as loans, creditors and taxes.
What does turnover mean?
The turnover is the total amount your business generates by selling products or services before costs and taxes are deducted.
What are costs?
Cost are the expenses your company incurs to run its operations, such as purchasing raw materials, paying salaries, rent and utilities.
What does profit mean?
Profit is the amount remaining after all costs have been deducted from sales. It is a measure of your company's financial performance.
What does cash flow mean?
The cash flow is the money coming in and going out of your business. It shows how much liquidity you have available to meet your ongoing business obligations.
What does liquidity mean?
Liquidity refers to how quickly you can turn your assets into cash to pay debts or expenses. Higher liquidity means you have more flexibility to cover unexpected expenses.
What does solvency mean?
Solvency measures your company's ability to service its long-term debts. A high solvency ratio means your company is financially sound and able to repay its debts.
What does gross profit margin mean?
The gross margin is the difference between sales and cost of sales. It is expressed as a percentage and gives an indication of your company's profitability.
What does net profit margin mean?
The net profit margin is the percentage of sales remaining after deducting all costs, including taxes and interest. It gives an indication of how efficient your business is in generating profits.
What does gross margin mean?
The gross margin is net sales minus the cost of goods sold. It is often expressed as a percentage of net sales.
What does ROI or Return on Investment mean?
Return on Investment (ROI) measures the efficiency of an investment. It is calculated by dividing the net profit of an investment by the cost of the investment.
What does EBITDA mean?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. It is a measure of a company's operational profitability.
Conclusion
Understanding and monitoring these terms can help you measure and improve your business performance, manage budgets more effectively and make more informed decisions about future investments and growth. By familiarising yourself with these terms, you will be better prepared to run your business successfully.
👉 Funkhaus goes the extra mile for you
We are the all-in-one partner that takes care of everything: from creative web designs to technical optimisations and strategic content. You focus on your business, we take care of the rest.
Send us an email for personal advice
Get in touch, and we'll schedule an appointment soon
👋 Hi, we are there for you!
What our partners say
Elien Degens
I came to you via a good reference to provide my website for e-commerce. Wout thought along with me about the possibilities and offered an ideal solution, taking into account the budget.
Transparent, professional communication and a very high-quality delivery. Thank you for this!
Emmanuel Verraes
Very hands-on and service-minded! I have been recommended Funkhaus by another customer and I - on turn - highly recommend their services.
Alexander Coopmans
Funkhaus thinks along with the customer to come up with a good solution for the question or project.
Their quote, prices are transparent and clear.
Top service, would definitely recommend them.
Yv. Private
Always a very quick response and strong in communication. Wout can switch quickly and always understands immediately what I mean. The end result is therefore always quick and immediately satisfactory. Definitely highly recommended!
Koen Van den Abeele
Top service!
Highly recommended to anyone looking for reliable & honest marketing support with a creative touch!👌
Peter Claes
I contacted Wout as part of a mini RFP where he came out on top in a selection of 13 competitors. He was not the cheapest but stood head and shoulders above the competition in terms of responsiveness, clarity, transparency, helpfulness and willingness to listen.
From the start of my project, it turned out to be precisely these qualities that ensured that every question, every suggestion and the countless times I changed my mind were calmly and openly met and resolved by Wout.
Each time, he managed to clarify my sometimes confused suggestions, offer some solutions and then, above all, implement them at lightning speed (even "on the spot" in some cases).
His communication is calm, friendly, never pedantic or unnecessarily complicated. He is approachable, always accessible and keeps his appointments.
He will also explain his views on certain decisions and frame them with the necessary diplomacy.
He kept me informed at every step of the progress he had made, the next steps and the actions I still needed to take myself.
And the result is a website that runs flawlessly and that I can be incredibly proud of. NPS 10/10.
Yves Van Pelt
Our website was created by Funkhaus. Wonderful result and overall more than satisfied with the approach, listening to our wishes, fresh whole and above all a good working product. Thanks for everything Wout. We can only recommend you.
Mara Bisceglia
What a top service!
Thanks Wout !
Leen Vermeiren
After being introduced to several website builders, we confidently went with Funkhaus to build our new website and choose our new corporate identity. Wout guided us through the whole process in a professional, efficient and friendly manner. We are very happy with this cooperation and can definitely recommend Funkhaus. Feel free to take a look at the website of Stella Matutina Wuustwezel.
Jakster Fransiscus
Excellent advice for my new website! Very professional and focused tips. Highly recommended!
