PEN - Financial Analysis

Cash Flow

The net amount of cash moving into and out of a business right now

Profitability

The state of yielding a financial profit calculated as revenue minus total expenses

Liquidity

An asset's ability to be easily and quickly converted into cash

Income Statement

A financial statement that summarizes revenues

Revenue

The total amount of money brought in by a company's operations before expenses

Net Income

The final profit left over after subtracting all costs

Balance Sheet

A financial snapshot of a business tracking assets

Cost of Goods Sold

The direct costs attributable to the production of the goods sold such as raw materials

Fixed Costs

Expenses that do not change based on sales volume such as rent and insurance

Variable Costs

Expenses that fluctuate directly with production volume such as shipping and raw ingredients

Break-Even Point

The exact point where total revenues equal total expenses and profit is exactly zero

Burn Rate

The rate at which a new company spends its cash supply before generating positive cash flow

Capital Expenditures

Funds used by a company to acquire

Return on Investment

A performance measure used to evaluate the efficiency or profitability of a financial investment

Bootstrapping

Funding a startup company entirely through personal savings and initial cash flow without external investment

Venture Capital

Financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential

Angel Investor

A high-net-worth individual who provides financial backing for small startups

Collateral

An asset that a borrower offers to a lender as a security for a loan

Working Capital

A measure of a company's operational liquidity calculated as current assets minus current liabilities

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for

Accounts Payable

Money owed by a business to its suppliers or vendors for goods or services received but not yet paid for

Depreciation

The systematic reduction in the recorded value of a tangible asset over its useful life due to wear and tear

Equity

The value of the shares issued by a company or the amount of ownership a founder retains in their business

Debt Financing

Raising capital by borrowing money from a lender or bank that must be repaid over time with interest

Scalability

The capability of a startup system

Market Penetration

The percentage of a target market that buys a specific startup's product or service

Customer Acquisition Cost

The total financial cost of convincing a potential customer to buy a product or service

Value Proposition

A clear statement explaining the unique benefit a startup's product provides and why customers should choose it over competitors