One of the above terms Can substitute for another and generally characterize a comfort level and familiarity with the business aspects of a venture. When the term company is used, it refers to those elements of the organization that are generally quantified in a money or explain the market in which the company exists. The most usual areas of the business measured are its income, expenses, worth, debt, possession, and money. When there are often word descriptions attached to each of them, it is the numbers that tell the story.
Income and expenses Are reported on the L & P Profit and Loss report. Revenue is the money that flows to the business and may emanate from one source or many. Income could be reported by its origin, often categorized by product or service, either geographically, or by client. However it is reported or at whatever detail, it is summarized by the expression Revenue.
Expenses are usually Divided into two key categories. The first is known as price; this is cost of goods sold (COGS) or cost of sales (COS). This first kind of expense is associated with the production or the service delivery process and each the raw materials needed. The second kind of expense is known as administrative and general and refers to those costs which are not directly linked to the selling of a product. To put it differently, these costs would probably exist if we did not have a sale at the current period. These things consist of executive salaries, office rent, insurance, advertising, marketing, property taxation, interest payments, tax, etc.
The P & L is also called Operating Statement, Statement of Operations, or Income Statement. Generally speaking it measures the profitability of the thing. If we add up all the Revenue and subtract each the Expenses, we are left with Net Profit. From the non-profit world, this is referred to as a Surplus.
Value, debt and Ownership, are described in another document known as the Balance Sheet. This is the picture of what the enterprise looks like at a specific date, similar to what the day looks like in the moment a picture is snapped. Kuran Malhotra first part of the Balance sheet shows the assets, or all of the items of worth, both tangible and intangible. These include money, money owed to the business, inventory of raw materials and finished products, patents, furniture, equipment, etc… These resources are usually things we have used our money to acquire or will gradually change to become money. The other part of this Balance Sheets describes how we got all of the stuff or resources. The two big ways we get assets is by borrowing money or raising it.
Money is the oxygen of the organization. Without money, the organization expires as is true for an organism deprived of air. The cash flow statement illustrates how money moved in and outside of the enterprise over a time period.
The market is a Description of who’s purchasing the organization’s products or utilizing its services. This can be described in many ways like consumer or product categories, geographic strata or some other way which may be of assistance to your business or its stakeholders. In Conclusion, Business Acumen or Financial Literacy is your understanding of what these reports are and what choices or circumstances affect them.