GlossaryThe FP&A & finance glossary
Plain-English definitions of the budgeting, forecasting, reporting, and accounting terms every finance team should know.
A
- Accounts payableAccounting
- Money a business owes to suppliers for goods or services received but not yet paid.
- Accounts receivableAccounting
- Money owed to a business by its customers for goods or services delivered but not yet paid.
- Accrual accountingAccounting
- Recording revenue and expenses when they are earned or incurred, rather than when cash changes hands.
- AmortizationAccounting
- Spreading the cost of an intangible asset, or the repayment of a loan, evenly over time.
- ARR — Annual Recurring RevenueSaaS metrics
- The yearly value of recurring subscription revenue, normalized to a 12-month period.
B
- Balance sheetReporting
- A snapshot of what a company owns, what it owes, and its equity at a single point in time.
- Break-even pointMetrics
- The level of sales at which total revenue equals total costs, so profit is exactly zero.
- BudgetBudgeting
- A financial plan that sets expected revenue and spending over a future period.
- Budget vs actualBudgeting
- A comparison of planned (budgeted) figures against what actually happened.
- Burn rateMetrics
- The rate at which a company spends its cash reserves, usually measured per month.
C
- CAC — Customer Acquisition CostSaaS metrics
- The average cost of sales and marketing required to acquire one new customer.
- Capital expenditure (CapEx)Accounting
- Spending on long-term assets such as equipment, property, or software.
- Cash flowMetrics
- The net movement of cash into and out of a business over a period.
- Cash flow statementReporting
- A report tracking cash through operating, investing, and financing activities.
- Churn rateSaaS metrics
- The percentage of customers or recurring revenue lost over a given period.
- COGS — Cost of Goods SoldAccounting
- The direct costs of producing the goods or services a company sells.
- ConsolidationReporting
- Combining the financials of multiple entities into a single set of statements.
- Contribution marginMetrics
- Revenue minus variable costs; what is left to cover fixed costs and profit.
D
- Deferred revenueAccounting
- Cash received for goods or services that have not yet been delivered.
- DepreciationAccounting
- Allocating the cost of a tangible asset across its useful life.
E
- EBITDAMetrics
- Earnings before interest, taxes, depreciation, and amortization; a proxy for operating profitability.
- EquityAccounting
- The owners' residual interest in a company after liabilities are subtracted from assets.
F
- Fixed costsMetrics
- Expenses that do not change with the level of output or sales, such as rent.
- ForecastForecasting
- A projection of future financial performance based on assumptions and historical data.
- FP&AGeneral
- Financial Planning and Analysis: the function that budgets, forecasts, and analyzes performance to guide decisions.
G
- Gross marginMetrics
- Gross profit expressed as a percentage of revenue.
- Gross profitMetrics
- Revenue minus the cost of goods sold.
I
- Income statementReporting
- A report of revenue, expenses, and profit over a period; also called the profit and loss (P&L).
L
- LiabilitiesAccounting
- What a company owes to others, such as loans, payables, and deferred revenue.
- LiquidityMetrics
- How easily a company can meet its short-term obligations with available assets.
- LTV — Lifetime ValueSaaS metrics
- The total revenue a business expects from a customer over the whole relationship.
M
- MRR — Monthly Recurring RevenueSaaS metrics
- Predictable subscription revenue normalized to a one-month period.
N
- Net incomeMetrics
- The bottom-line profit remaining after all expenses, interest, and taxes.
- Net profit marginMetrics
- Net income expressed as a percentage of revenue.
O
- Operating expenses (OpEx)Accounting
- The ongoing costs of running the business, excluding the cost of goods sold.
- Operating marginMetrics
- Operating income expressed as a percentage of revenue.
R
- RevenueMetrics
- The total income from selling goods or services, before any costs are subtracted.
- Rolling forecastForecasting
- A forecast continuously updated so it always looks a fixed period into the future.
- RunwayMetrics
- How long a company can keep operating before it runs out of cash, given its burn rate.
S
- Scenario planningForecasting
- Modeling multiple possible futures, such as best, base, and worst case, to test assumptions.
T
- TAM — Total Addressable MarketMetrics
- The total revenue opportunity available for a product or service.
V
- Variable costsMetrics
- Expenses that rise and fall with output or sales volume.
- VarianceReporting
- The difference between a planned (budget) figure and the actual result.
W
- Working capitalMetrics
- Current assets minus current liabilities; the short-term funds available to run the business.
Z
- Zero-based budgetingBudgeting
- Building a budget from zero each period, justifying every expense instead of basing it on the prior period.
Put these terms to work
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