Business Encyclopedia

Business Encyclopedia

If you would like to prepare for school subjects or simply increase your general knowledge, then enjoy our business encyclopedia. We tried to focus only on very important terms and definitions. We also kept our terminology very brief so that you absorb the concept more quickly and easily.

Business Glossary (Page 1)

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13: The most superstitious number, 13 affects business in surprising ways through absenteeism, cancellations, and design. Western airlines, for example, tend not to have seats and rows numbered 13. Friday 13th is a particularly superstitious date. Friday and the number 13 derive their superstitious reputations mostly from Christian beliefs and Norse folklore.
86: Secret' code used by restaurant and bar staff when refusing service or ejecting a customer from the premises, and more recently referring to a menu item not available, which is sometimes a lie to achieve the first meaning. The term has existed since the early 1900s and no-one knows the true derivation, although increasingly daft ones are suggested.
1630 LEVELS: Comparable to the 'closing price'. The final price at which a security is traded on a given trading day. On the Australian Securities Exchange there is a single-price auction between 4-10pm and 4-12pm on weekdays to set the daily closing prices. To see the ASX trading hours, click here.
21-GUN SALUTE: Traditional honour given to royalty and heads of state, derived from the old signal of peaceful intent, when multiple firing practically removed capability for immediate threat due to re-loading time.
24/7: Twenty four hours a day, seven days a week.
24-CARAT/KARAT: The purest form of gold (karat is US-English spelling, too soft for jewellery, hence gold jewellery is made of 22-carat, 18-carat, or 9-carat gold, etc., in which other metals such as copper are mixed. Carat is a measure of purity in which 24 parts equate (virtually) to 100% gold. 18-carat is therefore 75% gold. Less than 10-carat gold is generally not sold as gold. The carat measure of diamonds is different, for which carat is a measure of weight (1 carat = 200mg).
24-HOUR SOCIETY: Refers to a way of life available to many in the modern world in which people can work socialize, shop, bank, etc., 24 hours a day. The phenomenon has caused significant new thinking in business, management, marketing, etc., and continues to do so.
360 DEGREE FEEDBACK: An appraisal method typically entailing feedback about a manager given by fellow workers. See appraisals.
360 DEGREE THINKING: A term used for considering all options in business, etc., as opposed to having narrow field vision.
38 WAYS OF PERSUASION: The classic semi-serious guide to winning arguments featuring in The Art of Always Being Right, by German philosopher Arthur Schopenhauer (1788-1860).
64,000 DOLLAR/POUND QUESTION: The key or crucial question in a particular issue, deriving from an old US TV gameshow called Take It Or Leave It, in which $64 was the top prize (it was an old old show..) Recently the expression commonly increases the sum to 64-million, to keep pace with inflationary values.
72 RULE: More commonly known as the Rule of 72, with variations 69 and 70, these are standard figures used by financial folk in calculating quickly the years required for an investment to double (or to halve) at a given interest rate. Typically 72 is divided by the compound interest rate to give the approximate years. 72 is more popular than 69 or 70 because it is quite reliable and easily divisible quickly by lots of different numbers.
80/20 RULE: The theory that 20% of effort produces 80% of results, and very many similar effects; also known as Pareto Rule or Pareto Principle, after its originator.
A LA CARTE: Technically à la carte, an eating-place menu from which individual dishes at separate prices can be ordered, or less commonly where a side dish may be ordered at no extra charge, from the French phrase meaning 'to the menu'. Increasingly now applied to non-food services in which individual selections are offered rather than fixed provisions.
A1: Top quality rating, applicable to various business situations, e.g., credit-worthiness, and more general references to quality and fitness for purpose.
ABCP: Asset-Backed Commercial Paper.
ABILENE PARADOX: Observed in many poor or daft decisions by groups or committees, in which the collective decision is considered silly by individual members. From Jerry B Harvey's book The Abilene Paradox and other Meditations on Management (Jossey-Bass, 1988), a family decide to go to Abilene, as suggested by someone believing others might want to go, though he had no strong personal view. The trip was a waste of time, after which it emerged that no-one wanted to go. The effect can also apply in elections and especially tactical voting, whereby the collective effect produces an outcome nobody wants.
ABOVE THE LINE: Marketing and advertising through mass-media, such as television, radio, newspapers, magazines, Internet, etc., which is less personal than Below The Line Marketing. Companies usually use advertising agencies for ATL marketing. See marketing.
ABOVE-THE-LINE: In Marketing, relating to marketing expenditure on advertising in media such as press, radio, television, cinema, and the World Wide Web, on which a commission is usually paid to an agency.
ABRAM'S LAW: Construction industry theory relating to concrete strength as determined by the ratio of water to cement.
ABSOLUTE ADVANTAGE: Being able to produce goods more cheaply than other countries.
ABSORBED ACCOUNT: An account that has lost its separate identity by being combined with related accounts in the preparation of a financial statement.
ABSORBED BUSINESS: A company that has been merged into another company.
ABSORBED COSTS: The indirect costs associated with manufacturing, for example, insurance or property taxes.
ABSORPTION COSTING: An accounting practice in which fixed and variable costs of production are absorbed by different cost centers.
ABSTRACT: A brief summary covering the main points of a written article or research project.
ABUSIVE TAX SHELTER: A tax shelter that somebody claims illegally to avoid or minimize tax.
ACCELERATED COST RECOVERY SYSTEM: A system used in computing the depreciation of some assets acquired before 1986 in a way that reduces taxes.
ACCELERATED DEPRECIATION: A system used for computing the depreciation of some assets in a way that assumes that they depreciate faster in the early years of their acquisition.
ACCELERATOR: A company which supplies office space, marketing services, etc., in exchange for payment, to help get new companies started.
ACCEPTANCE BONUS: The amount paid to an employee who agrees to perform a difficult task.
ACCESS BOND: A type of mortgage that permits borrowers to take out loans against extra capital paid into the account, home-loan interest rates being lower than interest rates on other forms of credit.
ACCOUNT: A record of a business transaction. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged.
ACCOUNT BALANCE: The difference between the debit and the credit sides of an account.
ACCOUNTANT: One who is skilled at keeping business records. Usually, a highly trained professional rather than one who keeps books. An accoun¬tant can set up the books needed for a business to operate and help the owner understand them.
ACCOUNTING COST: The cost of maintaining and checking the business records of a person or organization and the preparation of forms and reports for financial purposes.
ACCOUNTING INSOLVENCY: A the condition that a company is in when its liabilities to its creditors exceeds its assets.
ACCOUNTING PERIOD: A time interval at the end of which an analysis is made of the information contained in the bookkeeping records. Also the period of time covered by the profit and loss statement.
ACCOUNTING RATE OF RETURN: The ratio of profit before interest and taxation to the percentage of capital employed at the end of a period. Variations include using profit after interest and taxation, equity capital employed, and average capital for the period.
ACCOUNTS: An individual's or company's financial records. Also an arrangement to keep money with a financial institution, e.g., a bank, building society, etc. See financial terms.
ACCOUNTS PAYABLE: Indebtedness of a company to its suppliers for goods or services purchased that have been purchased and which must be paid for within one year (more typically paid within 30-90 days). This shows as a current liability on the company's balance sheet.
ACCOUNTS RECEIVABLE: Amounts owed to a company by its customers for goods or services supplied to those customers which must be paid for within one year (more typically collected within 30-90 days). This shows as a current asset on the company's balance sheet.
ACCOUNTS RECEIVABLE FACTORING: The buying of accounts receivable at a discount with the aim of making a profit from collecting them.
ACCREDITED INVESTOR: Generally refers to a sophisticated, reasonably wealthy person who can invest in companies without requiring a prospectus from said company. The exact definition will vary among countries and regulators. In Canada and the US it is an individual whose net worth, or joint net worth with a spouse, exceeds $1,000,000 (excluding one's principal residence); or whose individual income exceeds $200,000/yr.
ACCRETION: Growth or increase in the value or amount of something. See financial terms.
ACCRETIVE: This usually refers to earnings that result from an acquisition of a business that add to the earnings per share as opposed to losses that would dilute earnings per share. As a general rule, an accretive merger or acquisition occurs when the P/E ratio of the acquiring firm is greater than that of the target firm. A "dilutive acquisition" is the opposite of an "accretive acquisition".
ACCRUAL: The accumulation of payments or benefits over time.
ACCRUAL ACCOUNTING: An accounting method which measures the performance of a company by recognizing financial transactions (purchases and sales) regardless of when the actual cash transactions occur.
ACCRUAL BASIS: A method of keeping accounts that shows expenses incurred and income earned for a given fiscal period, even though such expenses and income have not been actually paid or received in cash.
ACROSS THE BOARD: The involvement of, or affect on, everyone or everything in an industry or company.
ACTUALS: Real costs, sales, etc., that have occurred, rather than estimations or expectations.
ACTUARY: A professional expert in pension and life insurance matters, particularly trained in mathematical, statistical, and accounting methods and procedures, and in insurance probabilities.
AD HOC: Created or done for a particular purpose as necessary and not planned in advance.
AD ROTATION: Describes the rotation of advertisements on a web page, each time a user clicks on a different page or returns to a page they've viewed previously in the same session, a different advert appears on the screen.
ADDED VALUE: Enables and justifies a profit in business.
ADDENDUM: An added section of information in a letter or report.
ADJUNCT: A thing which is added or attached as a supplementary, rather than an essential part of something larger or more important.
ADMINISTRATIVE EXPENSE: Expenses chargeable to the managerial, general administrative and policy phases of a business in contrast to sales, manufacturing, or cost of goods expense.
ADOPTION CURVE: A graph showing the rate at which a new piece of technology is bought by people for the first time. It is based on the idea that certain people are more open for adaptation than others.
ADVERSE EVENT: Term used when a volunteer in a clinical trial has a negative or unfavourable reaction to a drug, etc.
ADVERTISING: The practice of bringing to the public's notice the good qualities of something in order to induce the public to buy or invest in it.
ADVERTISING STANDARDS AUTHORITY (ASA): The UK self-regulatory body funded by the advertising industry for ensuring that all advertising adheres to ASA standards, notably not to offend or mislead people. Equivalents named the same exist in other countries.
ADVERTORIAL: An advert in a magazine or newspaper that is written like an article giving facts rather than appearing as an advertisement for a product.
AFFIDAVIT: A sworn signed statement of fact used as evidence in court whose signature has been witnessed by a commissioner of oaths or other authorised officer, for example a notary. Medieval Latin for 'he has stated on oath', from affidare, meaning to trust.
AFFILIATE: A company or person controlled by or connected to a larger organisation. In web marketing an affiliate normally receives a commission for promoting another company's products or services.
AGEISM: Unfair prejudice or discrimination on the grounds of a person's age.
AGENT: A person who is authorized to act for or represent another person in dealing with a third party.
AGGREGATE: A whole consisting of the combination of smaller separate elements.
AGGREGATE PLANNING: The process of planning and developing the best way of producing the right amount of goods, at the right time and at the minimum cost, based on the total number of items which need to be produced, and the amount of materials, equipment and workers necessary for production.
AGGRESSIVE GROWTH FUND: A high risk investment fund in which shares are expected to increase in value very quickly in the hope of making large profits.
AGILE DEVELOPMENT METHOD: A type of business development which gets things moving quickly and adapts during the development, as distinct from conventional planning and project management implementation.
AGIO: The percentage charged by a bank for exchanging one form of currency or money, into another that is more valuable.
AGITPROP: Political propaganda (published ideas designed to motivate people into certain political views or actions) typically in art, music, literature, etc., a portmanteau word combining the original Russian words agitsiya (agitation) and propoganda, where the term grew from the state department responsible for disseminating communist ideas and information to its people in the 1930s. In the west the term is more associated with publication of left-wing or socialist ideas, often targeted against a governing right-wing authority.
AGRIBUSINESSS: Farming industry on a large corporate scale.
A-LIST: A list of the most celebrated or sought-after companies or individuals, especially in show business and entertainment.
ALPHA TEST: The first stage of testing a new product, especially computer software or hardware, carried out by a developer under controlled conditions.
AMALGAMATE: When two or more companies combine or unite to form one large organisation.
AMORTIZATION: This refers to the reduction in a liability over time, e.g. "amortizing" a loan by regular monthly payments against that loan.
AMORTIZE: To gradually reduce and write off the cost of an asset in a company's accounts over a period of time.
ANALYSIS: Breaking an idea or problem down into its parts; a thorough examination of the parts of anything.
ANCHOR TENANT: The first and most prestigious tenant, typically a store in a shopping centre, that will attract other tenants or shoppers.
ANCILLARY STAFF: People who provide necessary support to the primary activities and work of an organization, e.g, schools, hospitals.
ANGELS: Angel investors are successful entrepreneurs who are willing to invest some of their gains in new ventures. They typically also act as mentors to the founding entrepreneurs. What differentiates angels from other investors is that a) they invest their own money (not other peoples' money which they manage) and b) they have been an entrepreneur themselves.
ANNUAL REPORT: The yearly report made by a company at the close of the fiscal year, stating the company's receipts and disbursements, assets and liabilities.
ANNUAL REPORTS: All companies, public or private, are generally required to produce an annual report for their shareholders. Private companies have more flexibility in this regard and the report requirement may be waived or diminished as deemed by its owners. Public companies are required, by law, to produce annual reports and quarterly reports on their operations AND file these so that they can be accessed by shareholders as well as the general public (among which there may be future shareholders). At a minimum, these reports must contain complete financial statements (Income, Balance Sheet, Cash Flow) and various management discussions.
ANNUITY: Often used to provide a pension. An annuity is a fixed regular payment payed over a number of years to a person during their lifetime.
ANTEDILUVIAN: An interesting and humorous metaphorical description of something (for example a product or service or concept) that is obsolete, old-fashioned or primitive, or devised a long time ago. 'Ante' is Latin for 'before', and 'diluvian' is from Latin 'diluvium' meaning 'deluge', so the overall literal meaning is 'before the flood', being the biblical flood and Noah's Ark, etc. Antediluvian is therefore a clever way to say that something is (so old as to be) 'out of the Ark'.
ANTI-DILUTION RIGHT: Such a right gives a shareholder the right to acquire shares in subsequent share offerings such that the shareholder's percentage ownership does not get diluted (i.e. Decreased) as a result of the issuance of more shares.
APPELLANT: A person appealing to a higher court against a decision of a lower court or other decision-making body.
APPLE BOX: Used in films, TV, etc. Wooden boxes of various sizes which are used to elevate actors and celebrities.
APPRAISAL: Evaluation of a specific piece of personal or real property. The value placed on the property evaluated.
APPRECIATION: The increase in the value of an asset in excess of its depreciable cost due to economic and other conditions, as distinguished from increases in value due to improvements or additions made to it.
ARBITER: A person who settles a dispute or has the ultimate authority to decide the outcome of a matter.
ARBITRAGE: This entails the buying and selling (of a commodity, stock, derivative, etc) in different markets in order to make a profit as a result of a price differential. For example buying a stock listed on the Toronto Stock Exchange and simultaneously selling the same stock on the NASDAQ if, after taking taking currency exchange into account, the net selling price on NASDAQ is slightly higher than the net buying price on Toronto. Another example occurs when a takeover bid is made for a company and it is trading below the value of the bid. This presents an arbitrage opportunity for speculators.
ARBITRATOR: An independent person or body officially appointed to settle a dispute.
ARCHIVE/ARCHIVES: A collection of records no longer active. Also pluralised archives meaning the same, and referring to the place of storage.
ARM: Adjustable Rate Mortgage.
ARREARS: Amounts past due and unpaid.
ARTICLES OF ASSOCIATION: The document which lists the regulations which govern the running of a company, setting out the rights and duties of directors and stockholders, individually and in meetings.
ARTICLES OF INCORPORATION: A legal document filed with the state that sets forth the purposes and regulations for a corporation. Each state has different regulations.

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