The quintessential FP&A glossary.

Curious to know what certain FP&A terms mean? Browse this glossary to get FP&A definitions and deepen your knowledge. 

A

Accounting Close (Close, Monthly Close, Close Process)

Accounting close, otherwise known as close, monthly close, and close process, is a monthly deadline after which no further entries can be made to accounts. After accounting officially closes the month, FP&A kicks off its process of reporting and analysis.

Accounts payable (AP) is a company’s obligation to pay off its short-term debt to creditors.

Accounts receivable (AR) is money owed to a company from sales that have been made but not yet paid for.

Accounts receivable turnover is a metric that measures how efficiently a company is using its assets by looking at how many times per year a business will collect its average value of accounts receivable.

Accrual basis accounting is an accounting method where revenue is recorded when it is earned and expenses are reported when they occur, regardless of when cash is paid. This results in an income statement that more effectively measures the profitability of a company during a specific time period.

Acid test ratio (quick ratio) is an indicator of whether an organization has enough short-term assets to cover immediate liabilities. The quick ratio can be calculated by dividing liquid assets (assets that are cash or easily converted into cash) by the value of all current liabilities.

Active planning is a dynamic and proactive budgeting process that is collaborative, comprehensive, and continuous. An active planning process provides greater visibility into business performance, builds confidence in the numbers, enables data-driven decisions, and increases buy-in and accountability throughout an organization. Active planning requires planning software that is easy, powerful, and fast. Without all three factors, you’ll need to settle for a static plan that is perhaps outdated, inaccurate, or lacks buy-in from others.

Activity-based budgeting is a method of budgeting that determines which activities incur costs and the relationship between them, and how much of the total budget should be attributed or allocated to each activity.

Activity-based costing is a method of assigning costs, typically within manufacturing organizations, to products, services, or customers based on the activities that go into them and the resources consumed by those activities.

Activity-based planning is a business planning strategy that identifies the type and amount of activity needed to efficiently produce a desirable level of goods and services.

Actuals refers to actual numbers experienced through some point in time, as opposed to numbers that are budgeted or projected into the future (for example, year-to-date sales, expenses, units shipped, and so on).

Allocated costs are expenses that usually come from overhead that must be shared across multiple cost centers or departments. The company determines its own method to allocate or assign portions of those costs to each cost center and/or account that will need to absorb those expenses. Examples of allocated costs might include utility expenses, facilities costs, and IT services.

Allocations are the distribution of revenue or expenses across various departments, divisions, regions and so on.

An annual report is a yearly record of a company’s operations that includes a balance sheet and income statement. Annual reports are distributed to shareholders and can also be known as a 10-K, the name of the filing that is made to the U.S. Securities and Exchange Commission (SEC).

B

Balance Sheet

A balance sheet is a statement that summarizes all of an entity’s assets, liabilities, and capital at a given point in time. It’s one of the three main financial statements, along with the cash flow statement and income statement.

Before-tax profit margin is a company’s ratio of pre-tax income to net sales. The higher the pre-tax profit margin, the more profitable the company.

Benchmarking is comparing the financial metrics and ratios of an organization to a similar set of industry peers.

Break-even analysis is an analysis used to determine the point at which sales of a product or service would cover all expenses but make no profit.

Business intelligence is a set of concepts, methods, and tools that enable efficient discovery and analysis of data with the goal of making more effective and insightful business decisions.

C

Capital Budget

A capital budget is an organization’s expected capital expenditures for a given time period.

Capital expenditures is the amount of money used to acquire, maintain, or improve fixed assets or other assets that provide long-term value, such as land, buildings, and equipment. The company will spread the recognition of those costs over the useful lifetime of the new or improved assets through amortization or depreciation. Different asset classes have specific rules about determining their useful life and classification, following GAAP standards.

Capital rationing is a way of restricting the number of new investments undertaken by a company by imposing a higher cost of capital for investment consideration or by establishing a maximum for portions of a budget.

Capitalization is the sum of an organization’s stock value, long-term debt, and retained earnings.


Capitalization is also the process of expensing the cost of an asset over the life of that asset, instead of when the expense was paid for.

The capitalization ratio compares long-term debt with long-term debt plus shareholder equity in order to measure how well an organization’s debt can support operations and growth. This is the primary measure to understand how leveraged a company is with its debt structure.

Cash budget is a summary of an organization’s budgeted cash inflows and outflows during a specific time period as well as its anticipated cash and loan balances.

The cash conversion cycle is how long it takes for a company to convert resource inputs into positive cash flows. The cash conversion cycle measures the length of time that each net dollar worth of input is tied up before it is converted into cash. For example, how long does it take from a dollar being spent on raw materials to be converted into a finished product, sit in inventory, and finally be turned into a sale to a customer?

A cash flow forecast is a process for predicting an organization’s cash inflows and outflows for a future period.

Cash flow from operations is the net amount of cash generated by a company that is solely related to core operations of the organization. Cash flow from operations does not include any non-operational items such as the sale of investments, securities, financial instruments, or other fixed assets. To calculate cash flow from operations, add EBIT (earnings before interest and taxes) and depreciation, subtract taxes and include the change in working capital.

A cash flow statement provides a summary of the cash generated or used by a company in a given period of time. It’s one of the three main financial statements, along with the balance sheet and income statement.

A cash flow break-even point is the point at which revenue equals fixed and variable costs so that the sum of cash inflows and outflows equals zero.

Common-size analysis is a way to show all values as a percentage of a total value to allow for easy comparison between companies or between time periods of a company. For example, R&D or sales and marketing can be shown as a percentage of revenue.

Consolidation is the aggregation of financial statements from separate companies of a group as if they were a single entity. This is most commonly associated with the financial close process of a company.

Corporate performance management (CPM) is a category of finance and analytics software that tracks and measures the financial and operational key performance indicators of an organization. One benefit of CPM software is its ability to streamline all aspects of financial data analysis, budgeting, forecasting, building dashboards, and making more informed decisions. CPM is also known as enterprise performance management (EPM) and business performance management (BPM).

Cost allocation is the assignment of a shared cost to several cost centers. For example, a company might allocate or assign the cost of an expensive computer system to the three different departments in the company that use the system.

A cost center is a part of an organization, often a department, that does not directly add to profit but still incurs expenses and needs money to operate. Cost centers contribute to generating revenue indirectly unlike a profit center, which contributes directly to generating revenue from its actions.

Cost of capital is the rate of return that investors could have earned by investing the same funds in a different investment with an equal level of risk. It is a measurement of the opportunity cost of an investment.

Cost volume profit analysis (CVP) is a way to determine how many units of a good must be sold in order to break even or make a profit.

Costs of goods sold (COGS) is the total cost that an organization incurs to produce and sell a product or service to a customer for a given time period. For example, the COGS of an item would include the cost of selling an item such as a salesperson’s commission, not just the cost of acquiring raw materials and manufacturing.

Counterparty risk is the risk to both parties that one side will not pay as contractually obligated or fulfill other requirements agreed to in a contract.

Customer relationship management (CRM) is the collection and analysis of customer information intended for sale, marketing, and customer service, which helps companies to understand and support existing and potential customer needs. A CRM system is software that manages, tracks, and stores interactions with customers and their account histories in one centralized location.

D

Debt Equity Ratio

The debt equity ratio is a measure of how much debt a company is using to finance its assets relative to the amount of capital contributed by shareholders. The debt equity ratio can be calculated by dividing a company’s total liabilities by stockholder equity.

The debt ratio is a financial ratio that compares a company’s total liabilities to its total assets to measure the amount of leverage a company has. It can be used to determine how solvent a company may be and how well it can cover its debt and expenses using its existing assets.

Discounted cash flow (DCF) is an attempt to bring all estimated, future revenue and expenses to terms using present-day value. This is typically a data point in an overall project viability analysis and is useful for determining how attractive a potential investment is. This varies company to company but is a very common methodology to evaluate projects across a company’s portfolio of projects.

Driver-based planning is a method of planning where financial performance is forecast based on variables and formulas within models that influence and have a significant impact on an organization’s key financial results.

E

Earnings Before Interest and Taxes (EBIT)

Earnings before interest and taxes is a measure of an organization’s profitability before taking into consideration interest and taxes.

EBITDA is a common accounting measure of a company’s earnings before interest, taxes, depreciation, and amortization. EBITDA can be used to analyze and compare profitability and performance between companies and industries because it eliminates the effects of financing and accounting decisions.

The economic attributes framework is a methodology to assess the creation of value, at an industry level, by looking at the particular characteristics of high-level economic factors such as demand, supply, marketing, and financing.

Effective corporate tax rate is the average percentage of pre-tax profits that an organization has paid in taxes. To calculate the ETR, simply divide pretax profits by the amount paid in taxes.

Enterprise resource planning is a category of business software that typically integrates the core functions of accounting, human resources, and manufacturing to centralize information across an organization and improve efficiency. Many ERP vendors offer additional areas of support to additional departments beyond those core functions (such as logistics, CRM, and reporting) but often do not match the capabilities or sophistication of purpose-built (also known as best-of-breed) software applications.

Event risk is the possibility that an unexpected event, like a natural disaster or large outside investment action (such as a takeover), will hurt a company’s ability to meet its financial obligations.

Expected value is the value of a project or investment that is estimated by adding up different sums of possible outcomes multiplied by the probability of each outcome. It is a common method for incorporating risk measurements into the estimated returns for an investment.

Expenses are the cost an organization incurs as a result of doing business. There are various buckets of expenses including: fixed and variable, direct and indirect, and operating and non-operating expenses.

F

Financial Close

Financial close is a financial process when all related financial transactions have been completed and all associated accounts have been finalized. After financial close, there should be no further adjustments, and those metrics can be reported with confidence. Also see Accounting Close.

A financial plan is a financial model that describes and predicts an organization’s current and future financial state by using known variables and assumptions to predict future asset values and cash flows.

Financial reporting is the process of presenting information about an entity’s financial position, operating performance, and cash flow for a specified period. In the case of public companies, this can involve the creation and disclosure of regulatory documents such as the 10-K (annual report) and 10-Q (quarterly report).

A fiscal year (FY) is a 12-month period used for accounting purposes and in preparation of financial statements. The fiscal year is determined by the organization and may or may not be the same as a calendar year. The IRS (Internal Revenue Service) gives organizations the option to pay their taxes based on either the calendar year or their fiscal year.

A fixed asset is a long-lived asset or property that is used in the production of goods or services and cannot easily be converted into cash (illiquid). A fixed asset may be land, buildings, equipment, or machinery. There are other types of fixed assets that are not directly tangible such as patents, trademarks, and brand value.

A fixed cost is a cost that does not change no matter the increase or decrease in the amount of goods or services produced and/or sold. This is the opposite of a Variable Cost.

Forecasting is a process used to project future revenue and costs based on past, present, and estimated changes in financial data and conditions. Forecasting is a core process of FP&A, where companies regularly try to estimate the future financial situation of their organization to inform decisions about the accumulation and allocation of capital.

Free cash flow is used to measure a company’s financial performance by looking at how much cash it is generating. It can be calculated by subtracting capital expenditures from operating cash flow. Free cash flow is a tremendously useful measure for understanding the true profitability of a business. It is harder to manipulate and it can tell a much better story of a company than more commonly used metrics such as net income.

Full-time equivalent (FTE) is a measure of hours worked by one employee on a full-time basis. For example, two contractors each working 20 hours per week would be the same as one FTE (assuming a 40-hour work week).

G

General Ledger (GL)

The general ledger (GL) is an accounting record used to track and summarize all financial transactions within an organization. Increasingly, general ledgers are moving to cloud-based software so that users can access the information at any time and more easily integrate with other transactional systems.

Governance is a system of rules and practices established to ensure accountability, transparency, and fairness with all stakeholders involved in an organization or project. Corporate governance most often refers to the governance process overseen by an organization’s board of directors. However, governance is often applied across many aspects of an organization such as the governance of a large IT project or other significant investment.

Gross profit is the profit a company earns after the direct (variable) costs associated with manufacturing, distribution, and sale of the product are deducted. It is calculated by subtracting the cost of goods sold (COGS) from the company’s total revenue and does not take into account indirect costs such as taxes, interest on debt, or other overhead expenses.

Gross profit margin (aka Gross Margin) is the ratio of gross profit to revenue. It is a measure of the potential profitability of an item by looking at how much additional profit is earned with each additional dollar of revenue earned.

Gross sales are the total amount of revenue generated by all sales activity in an organization.

H

Human Capital Management (HCM)

Human capital management (HCM) is a philosophy that views employees as assets and seeks to acquire, train, manage, and retain those assets in such a way that they can provide future benefits and efficiencies to the organization. HCM software is available to automate or enhance HR functions such as payroll, training, talent management, and succession planning.

I

Intangible Assets

Intangible assets are non-physical assets, such as corporate intellectual property, goodwill, trade secrets, and brand recognition, that are considered useful beyond one year.

The interest coverage ratio measures whether a company is able to meet the interest payments needed to service its debt obligations. To calculate interest coverage ratio, divide interest expenses by EBIT (earnings before interest and taxes) for a given period—usually one year.

Internal rate of return (IRR) is a measure to determine the estimated return of an investment compared to an organization’s cost of capital. It states the interest rate an investment would need to have to break even with the present value of all projected cash flows for a project. If the IRR is positive, the project exceeds the risk-adjusted cost of capital. If it is negative, it doesn’t reach the risk-adjusted cost of capital (and you’d usually be better off making a different investment).

Investing is the act of using funds as efficiently as possible with the goal of achieving maximum returns.

K

Key Performance Indicator (KPI)

A key performance indicator (KPI) is a metric used to measure factors that are pivotal to the success of an organization. KPIs for every business may be different, but they will be the most important metrics that indicate the performance and health of an organization. Often these KPIs are collected together in the form of a dashboard that is distributed to key stakeholders, using data visualization software. KPIs are normally tracked over time to observe trends and compare with an organization’s plan for expected performance.

L

Lagging Indicator

A lagging indicator is an activity or event that, when measured, is a good indication of past (usually economic) activity. It can only be gauged following the completion of the activity or event. For example, salary growth is considered a lagging indicator of economic growth because it typically only happens after growth has occurred in an economy and there is increased demand for labor, which puts upward pricing pressure on wages as competition increases for limited labor resources.

A leading indicator is an activity or event that, when measured, is a good indication or signal of future (usually economic) activity. For example, the value of stocks in the stock market is often seen as a leading indicator because stock share prices are based on the estimated future earnings of a company. A rising stock price is a leading indicator of expected future growth for that firm.

Long-term liabilities are the financial obligations (usually debts) of a company that will not be paid within one year.

Long-term assets are assets that cannot be converted into cash within one year of the balance sheet date. Examples of long-term assets are multi-year leases on property, real estate holdings, long-term securities, and factory equipment.

M

Modeling

Modeling is the process of simulating the effect of specific variables on a financial outcome to improve financial decisions. This is a critical part of driver-based forecasting, where the core elements of a business process are used to model and estimate the future performance of that business function.

Modified cash basis accounting is a hybrid accounting methodology that combines elements of both accrual-based and cash-based accounting. The cash basis is used to record short-term items when cash changes hands. Long-term balance sheet items such as long-term debt and fixed assets are recorded using the accrual basis, with depreciation and amortization accrued over time.

N

Net Income

Net income is an organization’s income minus the total costs of doing business (direct, indirect, capital, financing, and depreciation), expenses, and taxes. This is how much the company has earned after taking into account all aspects of the organization, both operational and non-operational.

Net income before tax (aka profit before taxes or PBT) is a company’s profits before having to pay corporate income tax. It can be calculated two ways. The first is to sum all revenues from every source and subtract all expenses except for taxes. The second is to take net income and add in the corporate income tax paid.

Net present value (NPV) is a measurement used to determine the profitability of an investment or project. It is calculated by subtracting the present value of future cash outflows from the present value of future cash inflows. To calculate the present value of the cash inflows and outflows, you need to apply a discount rate. There are many ways to represent this formula but a common one is NPV = PV(inflows) - PV(outflows).

O

Operating Expenditures (OPEX)

Operating expenditures are the ongoing costs of doing business, such as salaries, utilities, commissions, employee benefits, and inventory. These are expenses where the full value of the expense is recognized at the time the expense is incurred. This is different from CAPEX, where the value of the expense is capitalized and depreciated or amortized over the useful life of the good or service acquired.

Operating profit margin (aka return on sales) is the amount of revenue remaining once all variable costs of production, distribution, and sales are paid. Operating profit margin can be used to measure how efficiently a company operates by looking at how much profit each dollar in sales generates. To calculate the operating profit margin, divide the operating profit by the total amount of net sales for a given period.

Overhead costs are the indirect costs and all other fixed expenses related to the cost of doing business that cannot be traced directly to the manufacture of a product or delivery of a service. Typically, overhead costs are allocated to a project, product line, department, or business unit.

P

Period

Period is a specified duration of time covered by a financial statement or report—typically a month or quarter for internal statements and reporting, and a year for external statements. The period in a financial statement will usually be in terms of the fiscal year of an organization (rather than a calendar year).

Period costs are any costs that cannot be attributed to a particular product or inventory. A period cost is charged to an expense account during the period it was incurred and is typically included within the selling, general, and administrative (SG&A) expenses section of the income statement.

Porter’s five forces model is a macro-level analytical framework that attempts to understand external forces as they relate to competition in an industry. The forces are: threat of substitution, threat of entry, supplier bargaining power, buyer bargaining power, and level of rivalry among competitors. The model was developed in 1979 by Michael E. Porter, a professor at Harvard University.

Present value (PV) is the current worth of a future sum of money or stream of cash flows that are discounted by an expected rate of return (usually the cost of capital). The higher the discount rate, the lower the present value of the future cash flows.

From the Latin meaning “for the form,” a pro forma is a financial report or statement that combines historical values with estimates of future or hypothetical events and conditions. It works as a what-if or simulated type of financial report. Pro forma reports are often done to try to understand the possible impact of future events on the financial performance of an organization.

A profit and loss statement (P&L) is a financial statement that summarizes financial performance by showing revenue, costs, and expenses incurred during a specified period of time. Also known as the income statement, the P&L statement is one of the three primary financial statements that public companies must issue to shareholders and regulatory agencies.


In business, a P&L sometimes means someone has operational and financial responsibility for a department, product line, or other area of the business that has a responsibility to generate revenue for the company.

A profit center is a department, area, division, or group within a business that is responsible for generating profits from its own operations. It is measured as if it were its own business within the company and measures its revenues, expenses, and profit separately. The leader of a profit center normally has budgetary control and discretion to do what is necessary within the profit center to deliver profits to the company.

Profitability analysis can be divided into two types of reporting that focuses on how effectively a project, product, or company generates profit. Internally, profitability analysis will look at the underlying segments or factors that are the primary drivers of profitability. For example, you may do profitability analysis to determine which type of customer is the most profitable to your company. Externally, profitability analysis uses various ratio measurements comparing a firm’s profits to its revenues, assets, and level of investment. This allows you to determine how efficiently a company generates profits compared to others or its opportunity costs.

Profitability ratios are a set of ratios used to measure how effectively a company can generate revenue against expenses, financing, and other relevant costs. The most common profitability ratios are:

  • Return on Assets (ROA)
  • Return on Equity (ROE
  • Return on Capital Employed (ROCE)
  • Net Profit Margin
  • Gross Margin Ratio

Q

Qualitative Evaluation

Qualitative evaluation is a method of evaluating investments using soft metrics and intangibles instead of modeling and measurements. For example, you may evaluate a potential project by analyzing how well it aligns with a company’s core competency rather than only looking at the projected financial returns of the project.

R

Required Rate of Return (RRR)

The required rate of return is the minimum allowable return an investor would accept from an investment in a project or company. If the expected return from an investment is below the RRR, the prospective investor would not make the investment. To calculate the RRR, investors normally add an expected risk premium to the current interest rate of a risk-free investment (U.S. Treasury bonds).

Research and development are expenses within a company that are associated with the creation and improvement of products and services, based on research, experimentation, and their application to anticipated customer needs. R&D expenses appear on the income statement and are subtracted along with selling, general, and administrative expenses from gross income to calculate operating income.

Retained earnings are the value of income generated by a company that are not redistributed back to shareholders. Instead, they are kept by the company to pay off debts or to reinvest back into the business. Retained earnings are a component of shareholder equity that appears on the balance sheet statement.

Return on assets is the measure of how profitable an organization is relative to the resources being financed by debt and/or equity. ROA is calculated by dividing net income by total assets.

Return on capital employed is the measure of the efficiency and profitability of a company’s capital investments. ROCE is calculated by dividing EBIT (earnings before interest and taxes) by the value of total assets less current liabilities.

Return on equity is the profit generated on shareholders’ equity, which measures how efficiently an organization provides returns from a shareholder perspective. ROE is calculated by dividing net income by shareholders’ equity.

Revenue is the amount of money a company receives for goods or services rendered during a specific period. It is also known as “sales.” While some people may use the term “income” to mean this as well, in a financial analysis context, “income” normally refers to the value that remains after some or all expenses have been removed from the value of sales.

Risk appetite is the level and type of risk that an organization is willing to accept in order to achieve its financial objectives.

Risk formula measures the probability of an event and its consequences by multiplying its asset value by threat rating and vulnerability rating. For example, if a scenario has a 10% chance of occurring and would cost the company $100,000, the risk for that event would be 10% x $100,000 = $10,000.

Risk management is the practice of identifying, evaluating, quantifying, and managing an organization’s risks. Risk management acknowledges that risk can never be fully eliminated. Instead, it must be managed so that an organization minimizes any unnecessary risks and only incurs risk as part of a sound decision-making methodology.

A rolling forecast is a core component of a continuous planning process. Rather than only looking through the end of the current fiscal period or year, a rolling forecast will forecast out a set number of time periods, such as 12 to 18 months, into the future. Most rolling forecasts focus on key business drivers instead of including every possible line item that might appear in a traditional budget. Rolling forecasts are well suited for improving agility and accuracy in decision-making for a company.

S

Scenario Planning

Scenario planning is a method of planning that analyzes the outcomes of a financial model based on the application of different circumstances to the model. Scenario planning is very helpful in conducting what-if analyses and better understanding the sensitivity of a model to changing inputs or assumptions.

Scope is the output, schedule, and resource boundaries associated with a project. Projects are often challenged with scope creep, where boundaries of the project are expanded to include additional requirements.

Selling, general, and administrative expenses are all costs, with the exception of interest and income taxes, not associated with the production and distribution of a good or service.

Sensitivity analysis is a method to test and evaluate how much the outcome of a model will change based on variability in an input or set of assumptions used in the model. This method is helpful and used with scenario planning and what-if analysis to understand how wide the range of outcomes could be for a project or the financial performance of an organization.

Statement of shareholders’ equity is a financial statement that details the changes in shareholder equity due to net income, dividends paid, or the repurchasing of stock.

Static planning is a traditional approach to budgeting, forecasting, and modeling. It’s a process that results in plans that often lack buy-in, have inaccuracies, and quickly fall out of date. Organizations with static planning often struggle to meet the strategic and dynamic needs of an organization to drive better financial performance.

Statutory tax rate is the charge imposed on the taxable income of a corporation, which is equal to gross income minus any deductions for labor, materials, and the depreciation of capital assets.

A strategic plan is a plan that defines the goals and objectives of an organization and establishes direction on how to achieve them within a set period of time.

T

Top-Down Budgeting

Top-down budgeting is a method of budgeting and planning where a high-level budget is created and then the amounts are allocated to individual functions or departments. Each department is then tasked with creating a detailed budget using its allocated amount of funds. Top-down budgeting is often applied when the finance department or executive staff has a specific revenue or profitability target they must meet and they want to set the budget based on that target.

Trial balance is a method for reviewing the values at the end of a period in a double-entry accounting system. Trial balance combines the total of all debits and credits, and under correct conditions, the total value is zero. If the trial balance is not zero, an error has occurred in the journal entry system. But just because a trial balance is zero, it does not mean that the journal is error free; it only means that all debits and credits combined equal zero.

U

Unallocated Costs

Unallocated costs are excluded from the calculation of COGS (cost of goods sold). They are the costs not directly nor indirectly associated with the production, sale, or delivery of a good or service.

V

Value Driver Tree

A value driver tree (aka DuPont analysis) is used to show managers where a company is losing or generating value. It looks like a flowchart, and begins with a top-level value metric such as ROE and then breaks down the ratios and calculations into successive steps and components that identify the underlying drivers of value in an organization.

Value drivers are the actions, processes, and results that deliver value to an organization, are crucial to its operations, and give it a competitive advantage.

Variable costs are production costs that change directly depending on a company’s production volume.

Variance reporting is a report where actual income and expenditures are evaluated against what has been budgeted or forecast. It is the way companies measure how well they are adhering to the budget or planned growth objectives.

W

What-If Analysis

What-if analysis is a method of planning that analyzes a company’s financial outcome based on a variety of different circumstances, scenarios, and assumptions.

Working capital is a financial ratio that measures a company’s efficiency and its ability to cover its short-term debts. It is calculated by subtracting current liabilities from current assets.

Z

Zero-Based Budgeting

Zero-based budgeting is a method of preparing budgets without carrying over numbers from previous years. Each activity must be justified since every department starts out with zero dollars to spend.

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