Glossary

…………………….GLOSSARY OF BUSINESS TERMS…………………….

Commoditized Industry: An industry where many businesses compete so that no one business rules the industry.

Fixed Costs: Business expenses that have nothing to do with a business’ product or service.

Gross Margins: This is the percentage of sales left after subtracting the cost of goods sold. It can be expressed in the following equation:  Gross margin = (Revenue РCost of Goods Sold) / Revenue.

Net Margins: The ratio of net profits to revenue. It can be found by dividing earnings before interest and tax by revenue.

Net Profits: This is the bottomline or net income of a company. Net profit is equal to the gross profit minus overheads minus interest payable for a given time period.

Revenue: The income a business receives.

Switch Cost: What it costs for a customer to switch companies.