Terminology

Business terminology is similar to a dictionary with the exception that the usage imparts the correct meaning on the word. Business terms generally have more than one meaning and depending on the context, determines the correct definition.

Value Investing

Value Investing

Value investing is a concept of buying and selling stocks based on business fundamentals and not as a reaction to news or market trends.   It is a well accepted principle that often the market overreacts to news causing stocks to plummet in price or escalate in value.   Value investors ignore this and use sound business fundamentals to trade stock.   Much of historical wealth accumulation is based in value investments.   There are no short-cuts or sudden actions taken by value investors.  All decisions are derived by business analytics and trendlines.

Revenue (Sales) Codes

Revenue Codes

Revenue (sales) codes are unique identifiers for products sold or services rendered. They are used to organize information so management can better understand customer demands and the company’s profitability related to the items sold.

Lien – Simple, Business and Legal Definitions

lien

A documented right to property owned by a debtor and granted to a creditor is referred to as a ‘lien’.  Although relatively a simple definition, it gets much more complicated when used in various contexts.  The word is most commonly used in business and is defined as the right to take property of a borrower when the borrower fails to fulfill their promise to pay the amount borrowed back to the lender.

Economies of Scale

Economies of Scale

Of the basic business principles, economies of scale has the greatest impact on profitability over any other business principle.  As an enterprise’s investment is spread over higher volume the cost per unit of production decreases.  The differential between sales price and cost changes add to the overall profitability for the company.

Discounts – Various Meanings in Business

Discounts

The term ‘discounts’ is a broad and varied meaning word when it comes to use in business.  It literally has four distinct definitions.  Each definition is used within a certain context of business.  The first and most dollar expensive use is with original issue discount related to bonds in the market.  The second use and most common is as an incentive in business.

Economic Substance Principle

Economic Substance Principle

The taxpayer must prove that the underlying economic transaction was not concocted to avoid or reduce tax liability. In the Gregory Vs.  Helvering case,  the Supreme Court actually uses the word  ‘sham’.

Business Trusts

Business Trusts

The common law definition of a business is an investment of capital or property by individuals which creates the means to carry on towards the goal of generating a profit.   Every state recognizes different legal formats to conduct business.   The simplest and most common is the sole proprietorship .   Other forms include partnerships, limited liability company and of course corporation status (S-Corporation is a federal tax option of a corporation).   However, two states actually recognize another legal format – business trusts.

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