The Business Glossary is a reference - one term per entry, written in plain English. The goal is that any business owner can look up an acronym or piece of jargon and walk away in two minutes with a clear understanding of what it means and how it's used. Entries cover finance terms (EBITDA, ARR, MRR), metrics (CAC, LTV, churn), accounting concepts (gross profit, net profit, working capital), growth and operations vocabulary (runway, burn rate, retention cohort), and the rest of the language that gets thrown around in business writing. Each entry includes a one-line definition, a slightly longer plain-English explanation, a practical example, and links to related entries and the deeper articles in our category pages. The glossary is meant to grow - new entries get added as we discover terms that come up often enough to deserve a short explainer. Use it alongside the topical categories: glossary entries explain the words; category articles explain how to use the concepts to run a better business.
Learning Center · Category
Business Glossary
Simple explanations of important business, finance and analytics terms.
Balance Sheet
BeginnerBalance Sheet: a snapshot on a single day of what a business owns and owes. Assets always equal liabilities plus equity.
Profit and Loss Statement (P&L)
BeginnerProfit and Loss Statement: the report that shows whether a business made money over a period. Also called the income statement.
Cash Flow Statement
IntermediateCash Flow Statement: the report that shows where cash actually moved over a period, across operations, investing and financing.
Business Health Score
BeginnerBusiness Health Score: a single 0 to 100 number that summarises how financially healthy a business is, derived from its financial statements.
Financial Second Opinion
BeginnerFinancial Second Opinion: an independent, plain-English read of the financial report your accountant prepared - aimed at helping the owner understand it.
EBITDA
IntermediateEBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization. A profit measure that strips out financing and accounting decisions for comparison.
ARR
IntermediateARR: Annual Recurring Revenue. The total subscription revenue a business expects to collect over a normalized year. The headline metric for subscription businesses.
CAC
IntermediateCAC: Customer Acquisition Cost. The average money spent to win one new customer. Foundational metric for any business spending on growth.
Burn Rate
IntermediateBurn rate: the rate at which a business is spending cash, usually expressed as a monthly net cash outflow. Critical metric for unprofitable businesses.
Runway
IntermediateRunway: the number of months a business can operate at its current burn rate before running out of cash. Critical metric for cash management.
Net Profit
BeginnerNet Profit: the bottom-line number after every cost is subtracted from revenue. The single number that answers "is this business actually making money?"
Gross Profit
BeginnerGross Profit: revenue minus the direct cost of what was sold. The first profit number on a P&L and the most direct measure of product-level profitability.
MRR
IntermediateMRR: Monthly Recurring Revenue. The normalized monthly subscription revenue a business can count on. The foundation of every other subscription metric.
LTV
IntermediateLTV: Customer Lifetime Value. The total profit a business expects from one customer over the full relationship. Half of the unit economics equation.
Revenue
BeginnerRevenue is the total money a business takes in from selling its products or services before any costs are subtracted. Also called the "top line."
Net Revenue
IntermediateNet Revenue: gross revenue minus refunds, returns, discounts, and allowances. The honest top-line number.
Cash Flow
BeginnerCash Flow: the actual money moving in and out of a business over a period. Different from profit. Determines short-term survival.
COGS
BeginnerCOGS: Cost of Goods Sold. The direct costs of producing or delivering whatever was sold. Subtracted from revenue to get gross profit.
Accounts Receivable
BeginnerAccounts Receivable (AR): money customers owe the business but haven't paid yet. The invoices outstanding waiting to be collected.
Accounts Payable
BeginnerAccounts Payable (AP): money the business owes vendors and suppliers but hasn't paid yet. The bills that are coming due.
OPEX
BeginnerOPEX: Operating Expenses. The day-to-day cost of running the business - rent, salaries, software, utilities. Distinct from COGS and CAPEX.
Fixed Costs
BeginnerFixed Costs: expenses that stay roughly the same regardless of how much business you do. Rent, salaries, software subscriptions, insurance.
Variable Costs
BeginnerVariable Costs: expenses that scale up or down with activity. Cost of goods, payment processing, contractor work, shipping.
ROI
BeginnerROI: Return on Investment. The profit generated by an investment relative to its cost. The standard way to compare different uses of capital.
Conversion Rate
BeginnerConversion Rate: the percentage of visitors, leads, or users who complete a desired action - sign up, buy, subscribe.
Budget
BeginnerBudget: a planned commitment to spend specific amounts in each category over a defined period. Distinct from a forecast.
Forecast
BeginnerForecast: a projection of future business performance based on current data and stated assumptions. Different from a budget.
Gross Margin
IntermediateGross Margin: gross profit as a percentage of revenue. The standard way to measure product-level profitability across periods and businesses.
Net Margin
IntermediateNet Margin: net profit as a percentage of revenue. The single number that answers "how much of every dollar do we actually keep?"
Operating Profit
IntermediateOperating Profit: gross profit minus operating expenses. The profit from running the core business, before interest and taxes.
Break-Even Point
IntermediateBreak-Even Point: the level of revenue (or units sold) at which a business covers all its costs and starts generating profit.
MoM Growth
IntermediateMoM Growth: Month-over-Month growth. The percentage change from one month to the next. Fast, noisy, useful for operational pace.
YoY Growth
IntermediateYoY Growth: Year-over-Year growth. Comparison to the same period a year ago. Cancels out seasonality; reflects underlying trend.
Growth Rate
IntermediateGrowth Rate: the percentage change in a metric over a period. The standard way to talk about how fast a business is moving.
Churn Rate
IntermediateChurn Rate: the percentage of customers (or revenue) that leave during a period. The single most important retention metric for subscription businesses.
Retention Rate
IntermediateRetention Rate: the percentage of customers (or revenue) that stay during a period. The mirror image of churn.
Working Capital
IntermediateWorking Capital: current assets minus current liabilities. The short-term liquidity buffer a business operates within.
Cash Reserve
IntermediateCash Reserve: cash set aside as a safety buffer for emergencies. Typically 3-6 months of fixed operating expenses, kept liquid and separate.
Free Cash Flow
IntermediateFree Cash Flow (FCF): operating cash flow minus capital expenditures. The cash actually available for owners, growth, or savings.
ROAS
IntermediateROAS: Return on Ad Spend. Revenue generated per dollar of advertising. The standard efficiency metric for paid media.
Customer Payback Period
IntermediateCustomer Payback Period: how many months of customer gross profit it takes to recover the cost of acquiring that customer. The other half of CAC analysis.
AOV
IntermediateAOV: Average Order Value. The average revenue per transaction. A foundational metric for any business with discrete purchases.
Customer Retention Cost
IntermediateCustomer Retention Cost (CRC): the amount spent to retain existing customers. The often-overlooked counterpart to CAC.
Variance
IntermediateVariance: the difference between budgeted (or forecasted) numbers and actuals. The starting point of management decision-making.
Scenario Planning
IntermediateScenario Planning: building 2-3 versions of a forecast under different assumptions to understand the range of likely outcomes.
Revenue Forecast
IntermediateRevenue Forecast: a projection of future revenue based on current activity, historical patterns, and explicit assumptions.
Expense Forecast
IntermediateExpense Forecast: a projection of future expenses, typically split between fixed costs (predictable) and variable costs (scaling with activity).
CAPEX
IntermediateCAPEX: Capital Expenditure. Money spent on long-lived assets like equipment, buildings, or software. Depreciated over years, not expensed immediately.
Accounts Aging
IntermediateAccounts Aging: a report that classifies receivables (or payables) by how long they've been outstanding. The standard cash flow management tool.
Inventory Turnover
IntermediateInventory Turnover: how many times inventory sells through over a period. The standard efficiency metric for any business holding stock.
Financial Run Rate
IntermediateRun Rate: extrapolation of current performance to a longer period. "$1M run rate" means current month × 12 = $1M.
Debt-to-Income Ratio
AdvancedDebt-to-Income Ratio: total debt service relative to income. The standard measure of how much debt a business can afford.
Liquidity
AdvancedLiquidity: the ability of a business to meet short-term obligations with cash or near-cash assets. A measure of short-term financial health.
Solvency
AdvancedSolvency: the long-term ability of a business to meet all its obligations. The structural counterpart to liquidity.
Profitability Ratio
AdvancedProfitability Ratio: any of several ratios that express profit as a percentage of something - revenue, assets, equity. Standard for comparison.
Related categories