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.