Business Glossary

• Above-the-line promotion


  Placing adverts using the media
• Acid test ratio


  Similar to the current ratio but excludes stocks from current assets. A more severe test of liquidity.
• Add value


  Offering extra features when selling a product, such as high-quality customer service, which helps to exceed customer expectations
• Administration


  Where a failing business appoints a specialist to rescue the business or winds it up
• Advertising


  Communication between a business and its customers where images are placed in the media to encourage the purchase of products
• Agent or broker


  An intermediary that brings together buyers and sellers
• Aims


  What a business tries to achieve in the long term
• Amortisation


  The writing off of an intangible asset
• Anti-competitive or restrictive practices


  Attempts by firms to prevent or restrict competition
• Appreciated (of a currency)


  A rise in the value of a currency
• Articles of association

  A document that provides details of the internal running of a limited company
• Assets

  Resources that belong to a business
• Authorised share capital


  The maximum amount that can be legally raised
• Authority


  The right to command and make decisions
• Autocratic leadership


  A leadership style where a manager makes all the decisions without consultation
• Average cost or unit cost


  The cost of producing one unit, calculated by dividing the total cost by the output
• Bank overdraft


  An agreement between a business and a bank that means a business can spend more money than it has in its account (going 'overdrawn'). The overdraft limit is agreed and interest is only charged when the business goes overdrawn.
• Barriers to entry


  Obstacles that make it difficult for new firms to enter a market
• Batch production


  A method that involves completing one operation at a time on all units before performing the next
• Below-the-line promotion


  Any promotion that does not involve using the media
• Bonus


  A payment in addition to the basic wage for reaching targets or in recognition of service
• Boom


  The peak of the economic cycle where GDP is growing at its fastest
• Boston matrix


  A 2x2 matrix model that analyses a product portfolio according to the growth rate of the market and the relative market share of products within the market
• Brand name


  A name, term, sign, symbol, design or any other feature that allows consumers to identify the goods and services of a business and to differentiate them from those of competitors
• Break-even

  When a business generates just enough revenue to cover its total costs
• Break-even chart


  A graph containing the total cost and total revenue lines, illustrating the break-even output
• Break-even output


  The output a business needs to produce so that its total revenue and total costs are the same
• Break-even point


  The point at which total revenue and total costs are the same
• Breaking-bulk

  Dividing a large quantity of goods received from a supplier before selling them on in smaller quantities to customers
• Budget

  A quantitative economic plan prepared and agreed in advance
• Budgetary control


  A business system that involves making future plans, comparing the actual results with the planned results and then investigating the causes of any differences
• Buffer stocks


  Stocks held as a precaution to cope with unforeseen demand
• Bushel


  Customary unit of weight or mass. Historically equal to 8 gallons (35 litres). Modern use: equal to a mass defined differently for each commodity.
• Business plan


  A plan for the development of a business, giving details such as the products to be made, resources needed and forecasts such as costs, revenues and cash flow
• Capacity utilisation


  The use that a business makes of its resources
• Capital


  Money put into the business by the owners
• Capital expenditure


  Spending on business resources that can be used repeatedly over a period of time
• Capital gain


  The profit made from selling a share for more than it was bought
• Capital-intensive


  Production methods that make more use of machinery relative to labour
• Capital productivity


  The amount of output each unit of capital (e.g. one machine) produces