BGS Terminology Explained
4ID BGS Terminology Standards Document
Attached please find the 4ID BGS Terminology Standards Document.
Cash: Why is this important?
What is Cash? Cash is the liquid currency that a business has on hand or in the bank. Why is it important? Having cash on hand is crucial because it determines your company’s ability to cover immediate expenses, invest in growth opportunities, and ...
Trailing 12 Months (TTM): Why is this important?
Trailing 12 Months (TTM) is a term used to describe the past 12 consecutive months of a company's performance. It does not typically represent a fiscal-year ending period. Eliminates seasonality, month to month variance. Avg CEO only looks at single ...
Days Sales Outstanding (DSO): Why is this important?
What is DSO? Days Sales Outstanding (DSO) quantifies the average number of days it takes for a company to collect payment after a sale is made. This tells you how much of your cash is tied up in customer accounts receivable. Why is it important? ...
Accounts Payable: Why is this important?
What is Accounts Payable (A/P)? Accounts Payable (A/P) represents the money a company owes to its suppliers for goods or services purchased on credit. Why is it important? Accounts Payable (A/P) is important because it reflects a company’s short-term ...
Accounts Receivable: Why is this important?
What is Accounts Receivable (A/R)? Accounts Receivable (A/R) represents the money owed to a company by its customer goods or services sold on credit. Why is it important? Accounts Receivable (A/R) directly impacts cash flow and is a good indicator of ...
Net Income: Why is this important?
What is Net Income? Net Income, also referred to as Net Profit or Net Earnings, is a key financial metric that represents the total profit a company has earned after accounting for all expenses, including operating costs, interest, taxes, ...
EBITDA Margin: Why is this important?
What is EBITDA Margin? EBITDA Margin, or EBITDA Profit Margin, is a financial ratio that represents the percentage of total revenue retained as EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). It measures a company's ability ...
Days Payable Outstanding (DSO): Why is this important?
What is DPO? Days Payable Outstanding (DPO) measures the average number of days a company takes to pay its suppliers and provides insight into a company’s cash management and liquidity position. Why is it important? DPO can be a powerful strategic ...
Debt to Equity: Why is this important?
What is Debt/Equity Ratio? The Debt/Equity Ratio, also known as the D/E Ratio, is a financial ratio that measures the proportion of a company's financing that comes from debt compared to equity. It provides insights into a company's capital structure ...
Operational Liquidity: What is it and why is it important?
What is Operational Liquidity (OP LIQ)? Operational Liquidity, often referred to as "Working Capital," represents a company's ability to meet its short-term financial obligations and cover day-to-day operational expenses using its current assets ...
Net Cash Flow: Why is it important?
What is Net Cash Flow? Net Cash Flow is the difference between a company’s cash inflows and cash outflows during a specific period. Why is it important? Net Cash Flow is important because it provides a clear picture of the company’s liquidity and its ...
Days of Cash: What does it mean and why is it important?
What is Days of Cash? Days of Cash refers to the number of days a company can operate using its available cash and cash equivalents without further revenue. Why is it important? Days of Cash indicates a company’s short-term liquidity and its ability ...
EBITDA: What does it mean and why is it important?
What is EBITDA? EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a financial metric that provides a snapshot of a company's operating performance by measuring its profitability before accounting for interest ...
Gross Profit Margin: Why is it important?
What is Gross Profit Margin? Gross Profit Margin, often simply referred to as "Gross Margin," is a financial ratio that represents the percentage of revenue a company retains as gross profit after deducting the direct costs associated with producing ...
Gross Profit: Why is it important?
What is Gross Profit? Gross Profit is a fundamental financial metric that represents the profit a company earns from its core business operations after deducting the direct costs associated with producing the goods or services it sells. It is a ...
OPEX: What does it mean and why is it important?
What are Operating Expenses (OPEX)? OPEX, short for Operating Expenses, refers to the costs that a business incurs in its day-to-day operations to generate revenue. These expenses are not directly tied to the production of goods or services but are ...
COGS: What does it mean and why is it important?
What is Cost of Goods Sold (COGS)? Cost of Goods Sold (COGS) represents the direct costs associated with producing or acquiring the goods or services a company sells. It plays a fundamental role in determining a company's profitability and is a key ...
Revenue: What does it mean and why is it important?
What is Revenue? Revenue refers to the total amount of money generated by a business or organization through its primary operations, such as selling goods or providing services, during a specific period of time. It is sometimes referred to as "sales ...