Financial planning glossary
Plain-language definitions for reading and adjusting a financial model.
- Revenue
- The amount earned from selling goods or services during a period, before deducting the expenses needed to deliver them.
- Capacity
- The amount an operation can deliver within a period, given its available premises, equipment, staff and service time.
- Operating break-even
- The point where operating revenue covers the operating costs included in the calculation.
- Cash flow
- Cash moving into and out of the business during a period.
- Payback period
- The time required for the chosen cumulative cash-flow measure to recover the initial investment.
- Working capital
- Current assets minus current liabilities. A model may use a narrower operating working-capital measure, so check which accounts it includes.
- Capital expenditure
- Spending to acquire or improve assets used over more than one operating period.
- Planning scenario
- A consistent set of assumptions used to explore a possible operating outcome.