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| income statement | a financial statement that shows how much a business has earned or lost during a year |
| balance sheet | financial statement that tells an entrepreneur what his or her business is worth at any given time |
| ratio analysis | ways of analyzing the financial condition of a business by comparing certain numbers from a balance sheet or income statement |
| current assets | cash (or things that can be converted to cash); also, items that are used up by a business within a year |
| current liabilities | debts due within a year |
| return on equity | the amount of money earned for each dollar invested by the owner of a business |
| variable costs | business expenses that change with each unit of product produced |
| fixed costs | expenses that don't change with number of units produced |
| cash budget | a financial report showing a business's projected and actual receipts/disbursements and the difference between the two |
| assets | items of value owned by the business |
| fixed assets | items of monetary value that are not easily converted into cash |
| liabilities | debts owed by the business |
| intangible assets | items of value that the business owns that cannot be seen or touched |
| long-term liabilities | financial obligations that will take the business more that one year to pay |
| net worth | the monetary value of the business; assets minus liabilities |
| Gross sales | the dollar amount of all sales usually within a one-year period |
| Net sales | Gross sales minus returned goods |
| Gross profit on sales | Net sales minus the cost of goods sold |
| net income | the amount of money left after all costs and expenses have been deducted |
