G
- G&A
- General and Administrative Expenses, also known as Overhead (and if Sales expenses are included, SG&A); includes all fixed costs or indirect costs such as rent, debt payments, lease payments, insurance, salaries of supervisory personnel, etc.
- GAAP
- Generally Accepted Accounting Principles; the guiding principles for financial accounting and accounting reports that includes the standards, conventions, and rules accountants follow in recording and summarizing business transactions and the preparation of financial statements.
- Go-To-Market Strategy
- The overarching strategy for you go to market with your products or services including public relations, advertising, marketing, channels of distribution, sales model, etc.
- Goodwill
- See Intangible Assets
- Gross Margin
- The difference between net sales revenue and the cost of goods sold (COGS) or Cost of Sales (COS)
Commonly referred to as gross profit and is usually expressed as a percentage as follows:
(100 * (Net Sales Revenue - Cost of Goods Sold) / Net Sales Revenue)
Therefore, $100 of net sales revenue with COGS of $50, results in a gross margin of 50%
Gross Margin is often measured on a unit of sales (unit gross margin) as well as a total gross margin for a given period
Gross Margin measures the ability of both to control costs and to pass along price increases through sales to customers and should be stable over time
A persistent gradual decrease is likely to indicate that productivity needs to be increased to return profitability back to previous levels - Gross Profit
- See Gross Margin
- Gross Receipts
- The total amount received from a customer for the sale of a good or service prior to the deduction of any allowances, discounts, credits, etc; also called Gross Sales or Gross Sales Receipts
- Gross Sales
- See Gross Receipts
- Gross Sales Receipts
- See Gross Receipts
I
- In-Market Timing
- The timeframe in which a customer is most likely to make a buying decision regarding a product or service
- Income Statement
- A financial statement of a company's operational performance with revenues, expenses and net income
- Indirect Expenses
- Expenses that are not directly attributable to producing a product or delivering a service. These expenses are also called Overhead and are expenses that are necessary no matter what products or services are delivered and no matter what level of Revenue is recognized for a given period. Indirect Expenses include such items as professional fees from accountants and attorneys, building leases, insurance, and management salaries for management staff that oversee all operations. Contrast with Direct Expenses, which are directly attributed to producing a product or delivering a service.
- Indirect Labor
- Labor expenses that are not directly attributable to producing a product or delivering a service and that are typically included in overall Indirect Expenses or Overhead. Indirect Labor expenses are typically management salaries for management staff that oversee all operations, rather than the production or delivery of a particular product or service. Labor expenses that are directly attributable to producing a product or service are by contrast called Direct Labor.
- Indirect Sales
- The business model of selling indirectly to the end user through sales channels such as resellers, distributors or jobbers
- Inelastic Demand
- Elasticity is a measure of responsiveness and demonstrates how much the quantity demanded changes when the price changes
Inelastic demand is when the customer demand either does not change with price or actually increases as price increases - they are said to be "price insensitive" or "price inelastic" - Infringement
- The violation of intellectual property rights, such as patents, copyrights or trademarks, usually in the form of unauthorized use
- Insolvency
- The inability of a debtor to pay his debt obligations
- Intangible Assets
- Any non-physical assets such as intellectual property, customer base, market reputation, brand recognition, etc.; also called Goodwill
- Intellectual Property
- Any intangible property that has value such as a registered copyright, trademark or patent; typically based upon whatever may be proprietary about your product, process or business
- Intellectual Property Leverage
- The ability to create something once and sell it over and over again with no effort to reproduce it (books, movies, software, patents, etc.)
I (continued)
- Inventory Turns
- The measure of the number of times a particular product or group of products are sold each year, which is an indication of the holding cost, typically defined as follows:
COGS (for the year) / Average Inventory (for the year)
Also known as Inventory Turnover, Stock Turns, or simply Turns
The more Inventory Turns throughout the year, the lower a company's holding cost, the higher the profitability and the more responsive to customer needs
J
- Joint Venture
- A business arrangement where two or more parties form a partnership with a shared interest in the ownership and profits; typically the parties to a Joint Venture contribute cash, products or services, employees and other valuable property to the joint venture for pre-determined period of time for a pre-determined goal
L
- Labor Pool
- The size or characteristics of that portion of the workforce that are potential employees
- Learning Curve
- The learning curve is the relationship between experience and efficiency
As individuals and/or businesses get more experienced at a task, they usually become more efficient at them; originates in the adage, "practice makes perfect" - Lease
- A legally-binding contract between two parties, typically regarding real estate; the Lessor (real estate owner) leases the real estate for a specified use to the Lessee (the tenant)
- Letter of Credit
- A letter issued by the bank of a company or individual that guarantees payment of up to a certain amount of money for a certain period of time; typically used in international trade such as import and export businesses
- Liability
- A loan, expense, or any other form of claim on the assets of a company that must be paid or otherwise honored by that company
- Licensing Agreement
- An agreement between two companies where one company agrees to license from the other company the rights to either tangible (such as a software license agreement) or intangible (such as a patent) assets; sometimes companies "cross license" each other certain assets
- Lien
- A security interest that one party holds in an asset that is put in place to ensure the payment of an obligation or liability by the party that owns the asset and is indebted to the holder of the lien
- Limited Liability Company
- A legal form of incorporation; a hybrid with some characteristics of a corporation and some characteristics of a pass-through entity such as an S corporation or partnership; also known as an LLC
- Limited Liability Partnership
- A type of partnership (not available in all states) that protects individual partners from liability for the misconduct of other partners or employees; also known as an LLP
- Limited Partnership
- A type of partnership in which some partners have limits on their control (the Limited Partners) while other partners exercise management control (the Managing Partners)
- Liquid Capital
- The amount of capital or net worth of an individual or company that is "liquid" or easily turned into cash such as cash and cash equivalent. Also called Liquid Assets.
- Liquidity
- The ability of a company to convert its assets, products or services into cash; in terms of stock holdings, the ability of a shareholder or optionee to sell their stock and turn their stock into cash
- LLC
- See Limited Liability Company
- Long Term Assets
- See Fixed Assets
- Long Term Incentive Plan
-
Usually called an LTIP for short, but also called a Deferred Bonus Plan, an LTIP is an employee (usually an executive employee) incentive system designed to retain key employees by providing an incentive over a longer period of time than the typical bonus plan. The typical LTIP usually provides a payout in two parts: the first part at the end of the period earned (usually one year) and the second part over a period of future years, thereby creating "golden handcuffs" that encourage the employee to stay with the company longer term.
See the Resources - Employees section for more information and the download Legal Template: Deferred Bonus Plan.
- Long Term Liabilities
- All debts and obligations of a company that are not due during the current period or year, but due in the future
- LTIP
- See Long Term Incentive Plan