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An annual meeting of all shareholders where the trading record of the business is explained for the previous year. Shareholders make be required to vote on certain items.

Aim^? is the London Stock Exchange's global market for smaller, growing companies. Membership rules are less onerous than for the main exchange.

Accounting procedure that spreads the cost of an asset over the life time of the asset.

An individual who invests their own money in growing and early stage businesses with the expectation of a high return^? on that investment.

An annual meeting of all shareholders where the trading record of the business is explained for the previous year. Shareholders make be required to vote on certain items.

Each company must produce an annual report on activities which include financial statements for its AGM^? and for submission to Companies House^?.

Law of which country is applied

Documents that establish a limited company^? setting out the internal operations of the company, including the powers of the directors.

The use of credit or leasing facilities provided by a specialist third party credit or leasing provider to finance the acquisition of assets^? for your business. The cost of the leasing or asset finance^? arrangements is spread over the normal life of the asset.

An asset is something which a person or business owns that is of value. Examples of business assets^? include: cash, debtors, stock, computers.

A company in which the main company has a substantial interest but less than 50%. Their may also be shared owners and/or management.

The total number of shares^? a company is authorised to issue in accordance to its memorandum and articles of association^?. The amount of issued share capital^? must be lower or equal to the authorised share capital^?. i.e. a company cannot issue more shares than it is authorised to issue in its Articles.

Business to business - a term that describes businesses that sell direct to other businesses.

Business to consumer - a term that describes businesses that sell direct to consumers.

A financial snapshot of the company's financial situation at that moment in time, showing everything the company owes and owns

Obstacles to the entry of new firms into the business' market. Can be technical barriers, legal barriers or barriers that arise from strong branding of the product.

The benchmark, set by the Bank of England, for interest rates payable on personal loans and mortgages.

A stock market in which share prices are falling.

A buy-in management buy-out. A combination of a management buy-out and a buy-in. Outside managers join forces with existing managers to take over a company, subsidiary or unit.

A precis of your personal history

A precis of your personal history

A grid containing four types of product, used as a means of analysing the product range of a business. The four types of product are cash cows, dogs^?, problem children^? or wild cards and stars^?.

When a business' total revenue^? equals its total cost. Below break-even the business makes a loss, above it a profit. OR The amount of goods that have to be sold in order for the business to make neither a loss nor a profit.

A summary of expected income and expenditure for the coming year. A budget^? may also be prepared to show the expected income and expenditure for a particular project for a funding application.

A stock market in which share prices are rising.

An individual who invests their own money in growing and early stage businesses with the expectation of a high return^? on that investment.

A government backed business support service.

A document containing the plans for the business including, historical information, planned strategy, forecasts, product information etc. For more information on writing a business plan^? see our guide under the Resources section.

The value of all the assets^? employed in a business, including equity^? and preference share capital, fixed and current assets, and gross borrowings plus current assets and less current liabilities.

Capital expenditure^? is spending by firms on capital equipment. This includes spending on machinery, equipment and buildings.

The difference between the sale and purchase price of an asset. Over a certain threshold will be subject to Capital Gains Tax^?.

A tax on profits which arise after you sell a capital asset, such as machinery, shares^? or property.

Products that produce a large amount of revenue^? because they have a large share of an existing market which is only expanding slowly. A term used to categorise one of the four types of goods shown by the Boston Matrix^?.

A record of an organisation's money income and money payments in a given period of time.

A projection of what a company expects its cash income and cash payments to be in a given period of time.

A tax on profits which arise after you sell a capital asset, such as machinery, shares^? or property.

Government office dealing with all aspects of company formations, shares^? and ongoing reporting.

Loan stock that gives the holder the right to convert to shares^? at a future date. The terms of the conversion are set at the time of issue.

Where larger companies invest in the development of smaller enterprises through, joint capital development or equity^? capital provision. Tax incentives are available.

The cost to a company of producing goods for sale. Similarly with a retailer or distributor type business, cost of sales^? is the cost of purchasing goods prior to their resale.

The cost to a company of producing goods for sale. Similarly with a retailer or distributor type business, cost of sales^? is the cost of purchasing goods prior to their resale.

A process of checking the facts of a business including its market, key staff, directors, financials, legal position etc. Usually carried out when an investment or acquisition is going to be made.

A type of long term bond (loan), taken out by a company, which it agrees to repay at a specified future date. The company will usually pay a fixed rate of interest to debenture^? holders each year until maturity.

Net borrowings of a company divided by shareholders' funds. The ratio shows the amount of financing that is provided by sources other than the shareholders i.e. from banks, other financial institutions, debenture^? holders and preference shareholders, less any cash held.

Someone who owes money to the business.

Accounting procedure that spreads the cost of an asset over the life time of the asset.

Discounted cash flow^? applies a discount rate to future cash flows to establish their present worth. Used by investors to calculate the present day value of future returns.

Companies may choose to distribute part of their earnings to shareholders, usually twice a year, in the form of a dividend^?. The dividend is usually paid in cash but can be paid in stock.

Any product that has a low or declining share of its market, usually a slow-growing industry. A term used to categorise one of the four types of goods shown by the Boston Matrix^?.

A process of checking the facts of a business including its market, key staff, directors, financials, legal position etc. Usually carried out when an investment or acquisition is going to be made.

A measure of how much profit a company is making for its shareholders. Earning per Share (EPS^?) = Earnings / Number of Shares^? in Issue EPS is a key ratio used in share valuations. It shows how much of the company's profits, after tax, each shareholder, effectively, owns.

Earnings before interest and tax. Calculated by taking the pre-tax profit of a company and adding back only the total interest charges which it has paid on debt. EBIT^? is a commonly used way of measuring the profitability of a company.

Earnings before interest, tax, depreciation^? and amortisation^?. EBITDA^? is a commonly used way of measuring the profitability of a company.

Under the Enterprise Finance Guarantee^? (EFG^?), the Government will guarantee lending to viable businesses to ensure that they can get the working capital^? and investment that they need.
The Small Firms Loan Guarantee^? has been suspended. The type of lending previously provided under SFLG^? – to businesses that lack collateral and/or track record – will still be available under the new scheme. EFG provides loans up to £1 million compared to an upper limit of £250,000 for SFLG and supports businesses with a turnover^? of up to £25 million compared to £5.6 million under SFLG. Additionally ECF loans can be used to convert an overdraft into a loan. EFG is available to viable businesses that in normal circumstances would be able to secure lending from banks but who cannot secure bank lending in the current times.
For more information please go to: http://www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/info-business-owners/access-to-finance/sflg/page37607.html

A meeting called either by the Board of Directors or shareholders of a company to discuss special business. This would include matters, such as, a proposed takeover^? or merger^?, or a substantial change in the way the business is to be run. A special resolution can only be passed at an EGM^?.

Person who undertakes the risks of setting up in business for profit.

Under the Enterprise Finance Guarantee^? (EFG^?), the Government will guarantee lending to viable businesses to ensure that they can get the working capital^? and investment that they need.
The Small Firms Loan Guarantee^? has been suspended. The type of lending previously provided under SFLG^? – to businesses that lack collateral and/or track record – will still be available under the new scheme. EFG provides loans up to £1 million compared to an upper limit of £250,000 for SFLG and supports businesses with a turnover^? of up to £25 million compared to £5.6 million under SFLG. Additionally ECF loans can be used to convert an overdraft into a loan. EFG is available to viable businesses that in normal circumstances would be able to secure lending from banks but who cannot secure bank lending in the current times.
For more information please go to: http://www.berr.gov.uk/whatwedo/enterprise/enterprisesmes/info-business-owners/access-to-finance/sflg/page37607.html

The EIS^? is designed to help smaller higher-risk trading companies to raise finance by offering a range of tax reliefs to investors who purchase new shares^? in those companies. To find out more, visit the Inland Revenue^? site at http://www.hmrc.gov.uk/eis/

Person who undertakes the risks of setting up in business for profit.

A measure of how much profit a company is making for its shareholders. Earning per Share (EPS^?) = Earnings / Number of Shares^? in Issue EPS is a key ratio used in share valuations. It shows how much of the company's profits, after tax, each shareholder, effectively, owns.

Shares^? are bits of equity^?. When used in the context of "raising equity" or a person putting in "equity", these are referring to investment being made in exchange for shares.

Ethical investors^? avoid companies such as military equipment manufacturers or firms that harm the environment.

A meeting called either by the Board of Directors or shareholders of a company to discuss special business. This would include matters, such as, a proposed takeover^? or merger^?, or a substantial change in the way the business is to be run. A special resolution can only be passed at an EGM^?.

Factoring^? is a way of reducing the time between raising an invoice and a company being paid by its debtors. The invoices are passed to a factoring company who immediately pay a percentage of the value The factoring company then chase the debt when it is actually due and keep the difference between what they receive and what they paid the company originally.

These goods are products bought on a regular basis by consumers, and generally those in supermarkets and chemists. Products will be food, non-food and healthcare items.

The Financial Services Authority^? (FSA^?) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. The Treasury appoints the FSA Board. The FSA regulates the financial services industry in the UK.

A term used to describe a business who is the first to enter a new market, and therefore has an opportunity to build market acceptance prior to competitors joining that market.

Costs that a company incurs regardless of how much it is producing or selling. For example: a shop will have to pay its rent irrespective of how much it sells.

Flotation^? is the process of making a company\'s shares^? available to the general public by obtaining a quotation on the Stock Exchange. Also referred to as \"going public\" or \"obtaining a Stock Exchange listing\".

These goods are products bought on a regular basis by consumers, and generally those in supermarkets and chemists. Products will be food, non-food and healthcare items.

These tend to be investors who provide initial funding for a start-up business. They are usually friends and family, as it is these who are most likely to invest when there is no business as yet.

The Financial Services Authority^? (FSA^?) is an independent non-governmental body, given statutory powers by the Financial Services and Markets Act 2000. The Treasury appoints the FSA Board. The FSA regulates the financial services industry in the UK.

Most commonly used to describe the level of a company's debt compared with its equity^? capital, and usually it is expressed as a percentage.

The value a business places on its intangible assets^?, such as reputation and brand name Goodwill^? is often given a value in a company's balance sheet^?.

The difference between the selling price of an item and the purchase or production cost, expressed as a percentage of the selling price.

The difference between the selling price of an item and the purchase or production cost, before taking into account overheads, salaries and wages, and interest payments.

A company which holds the majority of shares^? (over 50%) in its subsidiaries. Also known as the parent company.

An IFA^? will give you advice about which financial products you should be buying. They work on the basis of fees or commission from the companies whose products you purchase.

An IFA^? will give you advice about which financial products you should be buying. They work on the basis of fees or commission from the companies whose products you purchase.

The term used for a new share issue by a company coming to the stock market for the first time.

The inability of a person or company to settle debts when they become payable.

A group of individual investors who club together to buy shares^? on a collective basis and then share the profits made. This has the advantages of reduced transaction costs, shared knowledge and diversification.

A term used to describe the point at which a business and its management team are ready to meet with investors for the purpose of raising funds. Investor Readiness includes having the business plan^? complete, being up to scratch on presentation skills, understanding what you are looking for.

The term used for a new share issue by a company coming to the stock market for the first time.

The annual income from an investment as a percentage of the original investment.

The total number of shares^? a company has issued. The amount of issued share capital^? must be lower or equal to the authorised share capital^?. i.e. a company cannot issue more shares than it is authorised to issue in its Articles.

A company whose shareholders' maximum liability is limited to their share capital in the event of winding up.

Liquidity^? describes the ease with which an asset can be converted into cash immediately. A liquid market is one where there are many buyers and seller and it is easy to sell your investments. For example, the shares^? on the FTSE 100 index are very liquid while shares on the Alternative Investment Market are less so.

The purchase of a company by outside investors who bring with them a new set of managers.

The purchase of a company by its managers, often with backing from a venture capitalist^?.

The purchase and sale of a goods may be shown as Cost Price + Profit = Selling Price. The profit when expressed as a fraction, or percentage, of the selling price is known as the margin^?.

The purchase and sale of a good may be shown as Cost Price + Profit = Selling Price. The percentage added to the cost price to provide a profit is known as the mark-up.

The market capitalisation^? of a quoted company^? is calculated by multiplying its current share price by the number of shares^? in issue.

The use and details of the four Ps describing the strategic position of a product in the marketplace. Four Ps are: Product, place, price, promotion.

The purchase of a company by outside investors who bring with them a new set of managers.

The purchase of a company by its managers, often with backing from a venture capitalist^?.

Those details which a company, when formed, must submit to the Registrar of Companies together with its articles of association^?. They include company name, registered office, objectives, authorised share capital^? and a statement of limited liability.

Those details which a company, when formed, must submit to the Registrar of Companies together with its articles of association^?. They include company name, registered office, objectives, authorised share capital^? and a statement of limited liability.

The process by which two companies become one. If the companies are listed, the merger^? may be by agreement, or hostile. A hostile bid is one in which the directors of the target company reject the approach, but it is still possible for the predator company to obtain control if enough of the target's shareholders accept its offer.

Unsecured debt or preference shares^? offering a high return^? with a high risk. Ranked behind secured debt but ahead of equity^?. It may carry an equity kicker.

The value of an asset as entered in a business's accounts.

A director of a company who is not involved in the day-to-day running of the business but can help the company by offering an independent view on areas such as performance, standards and strategy.

The total assets^? of a company less all its liabilities including loan capital, and preference shares^?. NAV is usually expressed on a per share basis.

The total assets^? of a company (current assets plus fixed assets) less its current liabilities.

The value of an asset as entered in a business's accounts.

NPV^? is a calculation to establish the value of future earnings in today's money. To do the calculation you apply a discount % rate to the future earnings. The further out the earnings are (in years) the more reduced their present value is.

The gross profit^? of a company (total turnover^? of products sold less costs to purchase or manufacture) less all other expenses. When net profit^? figures are quoted, it is usually made clear whether the figure is before or after tax. In company accounts, the word 'net' is often dropped, so that you simply have 'Profit before tax' and Profit after tax'.

The price of a security (stocks, shares^?, bonds etc) when originally issued This bears no relation to the market price. Also known as face value or par value.

A director of a company who is not involved in the day-to-day running of the business but can help the company by offering an independent view on areas such as performance, standards and strategy.

NPV^? is a calculation to establish the value of future earnings in today's money. To do the calculation you apply a discount % rate to the future earnings. The further out the earnings are (in years) the more reduced their present value is.

The profit or loss a company makes from its trading activity and before any exceptional items are taken into account. Ebit^? and Ebitda^? are both types of operating profit^?. Operating profits are sometimes considered a better measure of whether the underlying business is doing well i.e. before deducting loan interest etc, which can give a misleading impression on the profitability of normal operations.

A concept used in economics and business to analyse the value of a product forgone in order to continue with another product. For example the opportunity cost^? of keeping your cash under the bed is the value of the interest you could have earned if you had deposited or invested that money elsewhere.

An option^? is the right, but not the obligation, to buy or sell shares^? at a fixed price within a specified period.

Shows the final outcome of the firm's trading over a particular period. The profit and loss account differs significantly from the balance sheet^? in that it is a record of the business's trading activities over a period of time whereas the balance sheet is the financial position at a moment in time. It basically shows how much the business has earned from selling its product or service, and how much it has paid out in costs (production costs, salaries and so on). The net of these two is the amount of profit they've earned.

This means "each is treated on an equal basis to every other" so in share terms each class of share is treated the same as the other classes.

A partnership^? is a group of individuals who are trading together with the intention of making a profit. Typical partnerships are those of accountants, solicitors and dentists. Each of the partners will contribute capital to the business and will normally take part in the business activities. The profits of the business will be shared between the partners; setting up a partnership agreement whereby the financial rights of each partner are set out normally does this. Just as with sole traders the partners will tend to withdraw the profits due to them from the business in the form of drawings, although in some cases partners may also be paid a salary by the business.

The most common measure of how expensive a stock is. The PE ratio^? is calculated by dividing the earnings per share^? figure into the market price of the shares^?. If a company has earnings per share of 35p and the market price is 500p, the shares have a PE ratio of 14.3 (500 divided by 35). Another way of saying this is that the shares are selling at 14.3 times earnings.

A company registered as a public company which has an unlimited number of shareholders, and can offer its shares^? to the public. To list on the London Stock Exchange a company will need to convert their status to that of a plc^?.

Shares^? in a company which give their holders an entitlement to a fixed dividend^? but which do not usually carry voting rights.

Shares^? in a company which give their holders an entitlement to a fixed dividend^? but which do not usually carry voting rights.

The most common measure of how expensive a stock is. The PE ratio^? is calculated by dividing the earnings per share^? figure into the market price of the shares^?. If a company has earnings per share of 35p and the market price is 500p, the shares have a PE ratio of 14.3 (500 divided by 35). Another way of saying this is that the shares are selling at 14.3 times earnings.

A company which is registered as a public limited company^?, has an unlimited number of ordinary shareholders and can offer its shares^? to the public.

A product that is growing rapidly and thus consumes large amounts of cash, but because they have low market shares^? they do not generate much cash. Has the potential to gain market share and become a "star" or "cash cow^?". A term used to categorise one of the four types of goods shown by the Boston Matrix^?.

Shows the final outcome of the firm's trading over a particular period. The profit and loss account differs significantly from the balance sheet^? in that it is a record of the business's trading activities over a period of time whereas the balance sheet is the financial position at a moment in time. It basically shows how much the business has earned from selling its product or service, and how much it has paid out in costs (production costs, salaries and so on). The net of these two is the amount of profit they've earned.

Operating profit^? as a percentage of sales (or turnover^?). To calculate profit margin^?, multiply operating profit by 100, and divide the result by turnover. Profit margin tells you about the underlying profitability of a company's trading activities, not whether it is actually making money for shareholders. Note that it is calculated before taking account of interest charges or tax.

An invoice presented by one company to another for payment for goods or services prior to their despatch or fulfilment.

The document which companies have to publish before issuing new shares^? to the public. The prospectus^? sets out the company's business, its financial history, performance, capital structure and future prospects, and the content has to comply with Stock Exchange rules.

A person who acts on behalf of a member/shareholder of a company for the purpose of voting at a company meeting.

A company registered as a public company which has an unlimited number of shareholders, and can offer its shares^? to the public. To list on the London Stock Exchange a company will need to convert their status to that of a plc^?.

A company which is listed on the Stock Exchange.

The annual income from an investment as a percentage of the original investment.

The annual return^? on an investment expressed as a percentage of the total amount invested.

ROCE^? takes all the assets^? employed in the business, including borrowings, and measures the return^? the company made on them. If a company has a low ROCE, it is using its resources inefficiently, even if its profit margin^? is high. Calculation: multiply operating profit^? by 100, and divide the result by total capital employed^?

Return on total assets^? is a measure of profit in relation to the total assets invested in the business, and ignores the way in which such assets have been financed. The total assets of the business provide one way of measuring the size of the business. This ratio measures the ability of general management to use the total assets of the business in order to generate profits. ROTA^? is calculated by Net Profit^? before Interest and Taxes divided by Fixed Assets plus Current Assets multiplied by100 to give X%. The figure you get from this calculation therefore tells you how much profit the company has made as a percentage of the total amount invested. The higher the figure the better.

Another term for sales or income.

When a smaller company buys a larger one. The term reverse takeover^? can also refer to a private company taking over a public company as a way of getting listed on a stock exchange.

An offer by a business to sell a new issue of shares^? to its existing shareholders, usually at a price which is lower than the market price.

ROCE^? takes all the assets^? employed in the business, including borrowings, and measures the return^? the company made on them. If a company has a low ROCE, it is using its resources inefficiently, even if its profit margin^? is high. Calculation: multiply operating profit^? by 100, and divide the result by total capital employed^?

Return on total assets^? is a measure of profit in relation to the total assets invested in the business, and ignores the way in which such assets have been financed. The total assets of the business provide one way of measuring the size of the business. This ratio measures the ability of general management to use the total assets of the business in order to generate profits. ROTA^? is calculated by Net Profit^? before Interest and Taxes divided by Fixed Assets plus Current Assets multiplied by100 to give X%. The figure you get from this calculation therefore tells you how much profit the company has made as a percentage of the total amount invested. The higher the figure the better.

Sometimes called bonus issue or capitalisation issue, these are shares^? distributed by a company which wants to shift some profits from its balance sheet^?. Current share holders will receive 'free' extra shares, but the value of the shares will fall to reflect the increased number of shares in circulation. The dividend^? payable on the shares is also likely to fall.

Seed capital^? is the initial investment made in a company at start-up. It is typically used to pay for such preliminary operations as market research and product development. Providers of this investment are usually the business founders themselves, using savings, mortgage money, or funds borrowed from family and friends. Seed capital tends to be a small amount - anywhere from £5,000 to £100,000 depending on the business.

A pension which allows savers to invest in a wide range of assets^? including shares^? and commercial property. The charges on SIPPS are usually higher than on standard pensions.

The Small Firms Loan Guarantee^? (SFLG^?) has now been suspended and replaced with the Enterprise Finance Guarantee^? (EFG^?)

Shares^? represent a stake in the ownership of a company.

A company which exists in name only and which has ceased to trade. Shell companies are at their most interesting when they are listed on a stock exchange, because they provide a cheap way for another company to acquire a listing by 'reversing' into the shell. Rumours perpetually surround listed shells, and their share prices can be quite volatile as investors get excited at the prospect of a reversal.

A pension which allows savers to invest in a wide range of assets^? including shares^? and commercial property. The charges on SIPPS are usually higher than on standard pensions.

Companies whose headcount or turnover^? falls below certain limits. These limits vary from country to country.

The Small Firms Loan Guarantee^? (SFLG^?) has now been suspended and replaced with the Enterprise Finance Guarantee^? (EFG^?)

Companies whose headcount or turnover^? falls below certain limits. These limits vary from country to country.

A loan with a below-market rate of interest

A company created to fulfil specific or temporary objectives, often to isolate financial risk.

A company created to fulfil specific or temporary objectives, often to isolate financial risk.

A tax levied on the transfer of shares^? or securities.

A product that has a high or rising market share within an expanding market. A term used to categorise one of the four types of goods shown by the Boston Matrix^?.

The amount of money that a business has at its disposal at any given time after paying out operating costs, interest payments on bank loans and bonds, salaries, research and development and other fixed costs^?.

Used to describe the efforts put into a start-up company by the founders in exchange for ownership shares^? of the company.

An analysis of the Strengths, Weaknesses, Opportunities, and Threats involved in a business or project.

When one company tries to take over another, it will usually offer a price higher than the current market price, so shareholders of the target company stand to make instant profits. Takeovers mean high share trading volumes and so generate fat fees for the brokers and banks involved.

The total sales of a company over a stated period.

Aspects of a business that differentiate it from competitors.

Shares^? in companies, often smaller ones, that are not traded on any stock exchange.

Aspects of a business that differentiate it from competitors.

An indirect tax levied on each stage of the production of most goods and services. VAT^? is currently charged at 17.5 per cent.

Capital invested into small and young companies in return^? for equity^? ownership.

A person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments.

A type of investment trust which invests in small unquoted companies with assets^? of under £15 million, including AIM^? and OFEX companies, and which is designed to attract risk capital from higher rate taxpayers by giving them tax concessions.

Capital invested into small and young companies in return^? for equity^? ownership.

A type of investment trust which invests in small unquoted companies with assets^? of under £15 million, including AIM^? and OFEX companies, and which is designed to attract risk capital from higher rate taxpayers by giving them tax concessions.

A person or investment firm that makes venture investments, and these venture capitalists are expected to bring managerial and technical expertise as well as capital to their investments.

Warrants^? are investments which give the holder the right to buy a given number of shares^? in a company at a fixed price at some future date, this date is usually several years ahead. A warrant is a right and not an obligation to buy. Warrants are often issued with a new share issue.

A company's current assets^? (cash, debtors, work in progress) less its current liabilities (creditors, taxes due). This capital is used by a company to run its business.

The percentage rate of return^? paid on a stock in the form of dividends, or the rate of interest paid on a bond or note.