English Vocabulary: 40 Important Business and Finance Words

Hello everyone,

Have you ever felt confused by all the business and finance words?

You’re not the only one!

Words like “ROI,” “equity,” and “liquidity” can be really confusing, even for people who have been working for a long time.

That’s why I made this guide to help you understand 40 important business and finance words.

I explain everything in a simple and friendly way.

Whether you’re a student, want to start your own business, or just want to learn about money, this guide will help you understand all the complicated words and give you the confidence to talk about business.

Let’s get started and make business words a little less scary!

Here’s a list of 40 business and finance terms along with friendly explanations to help you out:

Assets
Things a company owns that have value, like cash, property, or equipment.

Liabilities
Debts or obligations a company owes, such as loans or unpaid bills.

Equity
The owner’s share of the business after subtracting liabilities from assets.

Revenue
The total income generated from selling goods or services.

Profit
The money left over after subtracting expenses from revenue.

Expense
Costs incurred in running a business, like salaries, rent, and utilities.

Cash Flow
The movement of money in and out of a business, essential for daily operations.

Balance Sheet
A financial statement showing a company’s assets, liabilities, and equity at a specific time.

Income Statement
A report showing a company’s revenue, expenses, and profits over a period.

Budget
A plan for managing income and expenses to meet financial goals.

Investment
Putting money into something with the expectation of future returns or profits.

Dividend
A portion of a company’s earnings distributed to shareholders.

Stock
Shares of ownership in a company, which can be bought or sold.

Bond
A fixed-income investment where you lend money to a company or government for a return.

Market Capitalization
The total value of a company’s outstanding shares of stock.

Portfolio
A collection of investments owned by an individual or institution.

Diversification
Spreading investments across different assets to reduce risk.

Interest Rate
The cost of borrowing money or the return on investment.

Capital
Funds used to start or grow a business, which can come from loans, investments, or savings.

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Revenue Stream
Different sources of income for a business, like sales, subscriptions, or services.

Return on Investment (ROI)
A measure of how much profit you make from an investment relative to its cost.

Break-Even Point
The point where total revenue equals total expenses, so there’s no profit or loss.

Gross Margin
The difference between sales and the cost of goods sold, expressed as a percentage of sales.

Net Income
The final profit after all expenses, taxes, and costs are deducted from revenue.

Accounts Receivable
Money owed to a business by customers who have purchased on credit.

Accounts Payable
Money a business owes to suppliers or vendors for goods and services.

Overhead
Ongoing business expenses that aren’t directly tied to creating a product or service.

Leverage
Using borrowed money to increase the potential return on an investment.

Valuation
Determining the worth of a company or asset based on various factors.

Shareholder
An individual or entity that owns shares in a company.

Mergers and Acquisitions
Strategies for companies to grow, either by combining with another company or buying it.

Fiscal Year
A 12-month period used for financial reporting and budgeting.

Working Capital
The difference between current assets and current liabilities, showing a company’s short-term financial health.

Credit Score
A numerical rating of an individual’s creditworthiness based on their borrowing history.

Financial Statement
A formal record of the financial activities of a business, including balance sheets and income statements.

Capital Gains
Profits made from selling investments or assets for more than you paid for them.

Liquidity
How easily an asset can be converted into cash without losing value.

Securities
Financial instruments like stocks and bonds that can be traded.

Due Diligence
The research and analysis done before making a business decision or investment.

Scalability
The ability of a business to grow and handle increased demand without sacrificing performance or revenue.

How to remember words in an easy way

To remember vocabulary well, try different methods that suit how you learn.

-Begin with flashcards for practicing words over and over.

-Use new words in sentences and talks to get more comfortable with them.

-Pictures can help you remember words better.

-Also, learn words in stories or while listening to help you remember how to use them.

-Keep reviewing and practicing and connect new words to ones you already know.

These tricks will help you remember and use new words better.