Plain English

The business glossary.

Clear definitions, small worked examples and a question that brings the term back to your business.

20 terms

Accountability: Accountability is the obligation to explain and take responsibility for an agreed result or decision.
Accounts receivable: Accounts receivable are amounts customers owe the business for sales already recorded.
Automation: Automation is the use of a system to perform defined work with reduced manual intervention.
Bottleneck: A bottleneck is a constraint that limits the flow or output of a wider process.
Break even: Break even is the activity level at which the revenue in a model covers the costs included in that model.
Capacity: Capacity is the amount of work a system can deliver within a stated period under defined conditions.
Cash conversion cycle: The cash conversion cycle estimates the time between paying for operating inputs and collecting cash from the related sales.
Cash flow: Cash flow is the movement of money into and out of a business over a stated period.
Contribution: Contribution is sales revenue minus the variable costs included in the chosen calculation.
Contribution margin: Contribution margin is contribution divided by sales revenue, expressed as a percentage.
Delegation: Delegation is assigning responsibility for an outcome together with an understood level of authority and accountability.
Fixed cost: A fixed cost does not change directly with each additional unit of activity within the period and operating range being considered.
Gross profit: Gross profit is revenue less the cost of goods or services sold on the stated accounting basis.
Inventory turnover: Inventory turnover compares the cost of goods sold during a period with average inventory on a compatible cost basis.
Management rhythm: A management rhythm is a deliberate pattern of reviews, decisions and follow up that keeps work connected to its intended results.
Markup: Markup is the amount added to a stated cost, expressed as a percentage of that cost.
Net profit: Net profit is the amount remaining after the expenses included in the stated profit calculation are deducted from revenue.
Revenue: Revenue is income recognised from the business's ordinary sale of goods or services under its applicable accounting basis.
Variable cost: A variable cost changes with the level of activity used in the model.
Working capital: Working capital is commonly measured as current assets minus current liabilities.