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The 5 key financial terms all businesswoman should know

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As an upcoming businesswoman, it is imperative that you know how the business world works. In a male-dominated field, it can be very intimidating to be the only woman in the room at times, but you have to be the representation of what it means to be a businesswoman. Businesswomen are strong and sophisticated and defy the odds that often stereotype women into one generic category. Sometimes women who are not submerged in the world of business can feel swamped and lost from all of the jargon and information being thrown at them. This article will go over five important words that you should know and give some tips on how to succeed in this world.

Here is a list of 5 key terms that you should know if you want to be well-read in this industry:

  • Assets
  • Balance Sheet
  • Capital
  • Cash Flow
  • Accounts Receivable

Assets

On the surface level of business, but still important, assets are essentially the items that are owned by a business that has some level of value. Assets are owned by the company and have a high chance of being redeemable for cash. These can include anything such as machinery, facilities, equipment, and other components that help run a business. Besides understanding what an asset is, it may be helpful to look into the difference between deed and title because they often get mixed up by early business professionals.

Balance sheet

In terms of monitoring the progress of a business, business sheets help track its net worth. With all of the money that goes in and out of the company, it can be overwhelming to calculate information by hand. Balance sheets can be used to calculate the value of a company automatically with the calculators built into software such as Excel. This is the place where business assets are assessed to give a summary of how a company is doing. As a businesswoman, you should use balance sheets to your advantage to help track your progress if you decide to build a business from scratch or help run an existing business.

Capital

Although capital sounds similar to assets, it is more than that and has a different meaning. Capital is essentially the combined wealth of a company by using its assets, investments, and cash accounts to come to a determination. This is the umbrella of all things that a company has that has financial value to it. Not all capital can be sold, however, because this does include actually money that has already been stored in the company’s account. Capital can increase or decrease and is sometimes referred to as fixed capital. Intellectual property fits into this category of capital and can include knowledge such as marketing strategy. It always is very beneficial as a business professional to improve your marketing skills whether you want to advertise on social media or any other platform that allows you to share content.

Cash flow

It is very important as a businesswoman to know how to manage the money coming in and out of your business. Cash flow describes that money that regularly travels throughout your company and can vary from high to low liquidity. High liquidity cash flow means that it freely moves throughout the business as it continues to flourish and expand, but low liquidity may mean that cash is very limited and money isn’t really coming in. You want to make sure that your business is running smoothly and the best way to do this is to ensure that it is profiting off of its goods and services.

Accounts receivable

The last important term that business women should know is accounts receivable. This is another form of asset and refers to the money that outside businesses owe to your business. This is important to understand because accounts receivable balances should only exist for a short period of time. It is important to be able to manage those who choose to borrow from your company and owe you money. Fox News mentions that debt can sometimes be good but can also quickly turn bad if it is not managed properly. This can go wrong if you fail to keep borrowers accountable for what they owe your business.

About Ainsley Pavee

ainsleyp@thebusinesswomanmedia.com'

Ainsley Pavee is a New York based financial and business consultant with a focus on assisting female business owners and entrepreneurs overcome hurdles that can hold them back.

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