depreciation: an estimate of the amount that your fixed assets have decreased in value over a given time period, with respect to their useful lifespan.

amortization: see DEPRECIATION.

current liabilities: short-term debts, generally to be paid within a year.

balance sheet: a financial statement that shows the financial position of a business at a single point in time, by displaying its assets and liabilities and owner’s equity.

capital structure: the levels of debt and equity that have gone into financing a business.

cash flow statement: a financial statement that measures the actual level of cash in a business.

current assets: short-term assets, including cash and liquid assets that can be converted in cash fairly easily

current liabilities: short-term debts, generally to be paid within a year.

Discounted Cash Flows (DCF’s): future cash flows into/out of a business that are translated into a present value using a discount rate.

fixed assets: long-term assets of a company, also called capital assets. They are usually assets that last longer than one year.

Generally Accepted Accounting Principles (GAAP): The North American standard regulations for financial statements, which all businesses must adhere to.

income statement: a financial statement that examines the profitability of a business, stating the earnings for a given period of time.

Net Present Value (NPV): a framework for evaluating the profitability of new business projects based on discounted cash flows.

owner’s equity: money invested into a business by its owner(s).