Financial Acronyms Top 10

Business life is full of acronyms. Here’s the top 10 financial acronyms that
you should learn, so you are able to join the conversation with the CEO at your company. #10. SG&A. Selling, General and Administrative expenses,
the cost of “support” functions like sales, marketing, HR, finance, etc. SG&A in contrast to COGS and R&D. SG&A is often used in sentences like “We need
to dramatically cut SG&A”. #9. GAAP. Generally Accepted Accounting Principles. Used in sentences like “GAAP results for the
quarter were disappointing, but non-GAAP results looked a lot better”. #8. EBITDA. EBITDA is Earnings Before Interest, Taxes,
Depreciation and Amortization. Used as a cash-proxy in profitability analysis. #7. DSO. Days Sales Outstanding. How many days does it take on average for
your customers to pay you? Influenced by the terms you set, as well as
late payments or past dues. DSO is a key metric when discussing working
capital performance. If the cash from your customers is not flowing
in, you can’t bill your bills, you can’t invest, and you can’t pay dividends. #6. CapEx. Capital Expenditures, money spent by a business
or organization to acquire or upgrade fixed assets, such as buildings, machines and equipment. As opposed to OpEx, or Operating Expenditures. #5. EPS. Earnings Per Share, the number the CEO gets
nervous about when the quarterly earnings are about to be published. #4. V%. Variance %. Also used as VPY%, which is Versus
Prior Year %, or as VOP%, which is the variance versus operating plan. #3. EBIT. EBIT is Earnings Before Interest and Taxes. Revenue minus Cost Of Goods Sold is Gross Margin. Gross Margin minus SG&A and R&D is EBIT. #2. ROA. Return On Assets, a key indicator of business success. ROA is Net Income divided by Assets. ROA has many variations, some companies measure
ROIC, ROTC, ROCE, or RONOA. These are all variations on the same theme,
you look at the returns generated during a period, and compare them to the capital invested
in the company to generate those returns. #1. CFOA. Cash From Operating Activities. A key financial metric that business managers
can influence, by working on improving profitability and keeping working capital under control. Thank you for watching! If you enjoyed this short overview of key
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2 thoughts on “Financial Acronyms Top 10

  1. Enjoyed this quick overview of finance acronyms? Then please click the like button, subscribe to the channel, and dive into more details for one of the most important finance acronyms EPS

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