Terms of the Business Trade   Accounts Payable- balance sheet entry reflecting amounts owed to creditors (current liability) Accounts Receivable- balance sheet entry reflecting amounts owed to the business for goods or services (current asset) AGS- annual gross sales Allocation- the process of distributing an expense to a number of items or areas ANP- annual net profit Assessed Valuation- the taxable value of a property BLI- business listing information (sheet) Book Value- value stated on owner's statements or accounting records Current Ratio- comparison of current assets to current liabilities (assets divided by liabilities) Cash Flow- profit before income tax, depreciation, interest and owners compensation & benefits Contingencies- performance is dependent upon successful outcome of named event (verification of tax returns) Cost of Goods Sold- generally includes amount of goods & labor for service or delivery Covenant Not to Compete- agreement that the seller will not compete with the buyer for so many years in so many miles Depreciation- loss in value of a fixed asset due to wear & tear or obsolescence (which cannot be repaired by normal repairs) Due Diligence- process of evaluating the business for purchase in a set amount of time E2-Visa- Long term visa issued to a person making a substantial investment in an active enterprise EBIT- earnings before interest and taxes EBITA- earnings before interest, taxes and amortization EBITDA- earnings before interest, taxes, depreciation and amortization Escrow- held by a third party until all conditions are met Escrow Account- "non-interest bearing" account that is used for deposits on business purchase, regulated by the State FF&E- furniture, fixtures, & equipment FICA- Federal Insurance Contributions Act Goodwill- the difference between the total value of the business and the hard assets (FF&E) Gross Profit- income from sales less cost of goods sold (before overhead, general & administrative expenses) Guarantee- promise to pay, could be Corporate Guarantee or Personal Keystone- cost times two (triple key 3X) Letter of Intent- Non-binding intent to purchase and intent to sell (unless a better offer comes along!) Majority Owners- owners of a majority of the stocking a corporation Maker- the person signing or giving a promissory note Markup- amounted added to cost to arrive at retail (expenses plus desired profit) MGS- monthly gross sales Net Profit- difference between total income and total expenses Non-Disclosure Agreement (NonD)- agreement from buyer that he/she will divulge information about or that the business is for sale, talk to employees, customers, suppliers or anyone not directly involved in sale (lawyer, accountant) Nonrecurrent item- income or expense arising from a cause not likely to exist in future years Partner- one of the owners of an unincorporated business Pool Margin- average profitability expressed in cents Proprietary income- may include officer's salary,bonuses, owner's salary, perks and profit of business Proprietor- the owner of an unincorporated business Prorate- to spread equally over a period of time Recast Financial- owner "perks" are added back to come up with a true "owner benefit" Replevin- an action whereby the person entitled to repossession of goods may recover from one that has wrongfully detained such goods or chattels Residual Value- estimated scrap value of a tangible asset Retained Earnings- those profits kept in a corporation and not distributed as dividends SBA- Small Business Administration Service Business- firm dealing in non merchandising activities Simple Interest- interest on the principal only as compared to compound interest Sole Proprietorship- business owned by one person Taxable Income- gross income minus both exemptions and personal deductions Turnover- the rate at which an asset is replaced within a given time period UCC- Uniform Commercial Code WGS- weekly gross sales Working Capital- surplus liquid cash used to finance ongoing operations of the business   Send in your request or response for more!     Bizology - the study of business for sale     Bizology.com email to : info [at] bizology [dot] com Chambersburg, PA 17201-1712   * SELLING * FOR SALE * CONTRACTS - FORMS * FINANCIAL * REFERENCE * * TAX - LEGAL * * BUYING * | you are in buying index now | | business checklist | buyer disclosure | buyers cash requirements | | buyers ask questions | valuation program | buyer information | | where's the value | what happened to seller financing | | what to look for | business information sheet | buyer memorandum | | confidential buyer profile | | thank you | terms of the trade | | how to evaluate a business | food service | pre-paids | ratios | | let's see the books | escrow deposit | | main index