Accounting 101
Common Terms To Get You Started In Your Startup
There is a great deal to learn when starting a business; the fundamentals of sales, marketing, supply chain management and much more. Of all that there is to learn in and about your small business, the financial aspect is the most critical.
It is paramount to the health of your business to have a budget so that you can keep track of how you will use your resources to achieve the goals you have set for your small business. A budget will help you ascertain whether your business can survive with its projected income and expenses. If you do not have an accounting degree, it may prove extremely flustering to figure it all out.
Here are common terms and their respective definitions that you will need to know:
Quick formulas:
Gross profit = Sales minus Cost Of Sales
Current Assets/ current liabilities = ratio to assess health of your business. Shows how quickly you can pay off your debt. Good ratio = 1.7:1 and norm = 1:1