Entrepreneurship- Chapter 7,8,9

profit and loss statement

(P&L statement) • A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time.

debt

A generic term to describe any type of non-equity funding tied to the business. Contractual agreements whereby the firm receives some amount of money that must be repaid over aa specified interest rate.

board of advisors

A group formed at the discretion of the founders (regardless of the legal form chosen) and composed of individuals outside the business who advise the founder.

LLC

A limited liability corporation. § This business form is still relatively new. § Limited liability feature. § Allows more investors

LLP

A limited liability partnership. General partner In an LLP, the individual considered the manage of the firm, who as such, has unlimited liability for the debts or judgments against the firm.

asset based lending loans

A loan provided for the purchase of a necessary asset for the business.

ratio analysis

A series of ratios along four areas of company performance (liquidity, activity, leverage, profitability) that provides a picture of the health of the company.

partnership

A type of business formed between individuals directly. It includes both general and limited varieties.

factoring

Accounts receivable that are sold at a discount to another company to receive immediate cash.

ADA

Americans with Disabilities Act specifies protections in business for those with disabilities.

Contract

An agreement between two parties to perform certain activities for some consideration.

Subchapter S Corporation

An organizational form that treats the firm as an entity separate from the individuals. This allows the owners to treat the income as they would if the firm were a sole proprietorship or a partnership. It has limitations in the number and type of shareholders.

Patent

Claim of intellectual property that covers a specific innovation.

Trademark

Claim of intellectual property that is associated with a specific business. This may be the name of the firm, a symbol representing the firm, or the names of its products.

crowdfunding

Funds received by a business by soliciting a large number of very small investors usually via the Internet.

equity investment

Funds received by a business in exchange for a percentage ownership of the business.

Patent

Good for 20 years; Currently granted on a "first to file" basis; Expensive to obtain and maintain; Types- Utility, Design, and Plant; Can be a potent entry barrier; Only recognized in the countries where filed

business angels

High-net-worth individuals who invest in businesses not as a business, but as an individual.

accounts payable

Money owed by a company to its creditors.

leverage ratios

Ratios that are used to examine the relative level of indebtedness of the entrepreneurial business.

profitability ratios

Ratios that examine the performance of the firm and its ability to make economic rents over and above its costs.

activity ratios

Ratios that measure the efficiency with which the entrepreneur is handling the resources of the business.

liquidity ratios

Ratios that measure the short-term ability of the firm to meet its obligations.

grants

Special funds that do not require repayment and are designed to aid businesses in specific areas.

supplier credit

Suppliers often will provide credit on both physical assets (refrigerators, molding equipment, etc.) and the actual supplies provided.

shrinkage

The difference between what is sold and what was brought into the business.

copyright

The legal means to protect intellectual property. It grants ownership on creative materials generated, such as books, magazines, advertising copy, music, artwork, or virtually any other creative product, whether published or unpublished.

sole proprietorship

The simplest form of business organization, characterized by the fact that the person who owns the business and the business itself are treated as the same entity.

petty cash fund

operates like a savings account. withdraws made for small purchases

Bonding

• Covers damage done by employees. • Either intentional or unintentional.

Liability Insurance

• Covers lawsuits resulting from accidents. • Product liability insurance is also obtainable.

Workers compensation insurance

• Covers liability for workers injured on the job. • Can be a major expense.

venture capital fund

A fund that is organized to make significant equity investments in high- growth new ventures.

deviation analysis

A chart tracking various performance measures from one time period to the next.

sensitivity analysis

A chart using current cash flow statement, income statement, or balance sheet to create a pro forma projection based on a dramatic increase in sales, a dramatic decrease in sales, or the complication of a major change in the business.

draw

A distribution of funds from the business. It is usually in the form of a cash dispersion in advance of salary, bonus, expected year- end distribution, and the like.

asset leasing

A form of lease tied to a particular asset used by a business to conserve cash and maintain the latest versions of whatever equipment is available.