Reference
Finance glossary
Clear, jargon-free definitions of the money and business terms you'll meet across our calculators and guides — each linked to the tools where it matters.
A
- Amortization
- The process of paying off a loan with regular, equal payments over time. Early payments go mostly toward interest, while later payments go mostly toward principal. Mortgage Calculator
- Annual Percentage Rate (APR)
- The yearly cost of borrowing expressed as a percentage, including interest and certain fees. APR is usually equal to or higher than the stated interest rate and is meant to make loans easier to compare. APR vs Interest Rate guide
- Annual Percentage Yield (APY)
- The yearly return on savings or an investment including the effect of compounding. Unlike a simple interest rate, APY reflects interest earning interest over the year. Compound Interest Calculator
- ARPA (Average Revenue Per Account)
- The average revenue a business earns from each customer account over a period, usually monthly. It is a building block for metrics like customer lifetime value. Customer Lifetime Value Calculator
B
- Balance Transfer
- Moving debt from one credit card to another, often to take advantage of a lower promotional interest rate. Transfer fees and the rate after the promotional period both affect whether it saves money.
- Break-Even Point
- The level of sales at which total revenue equals total costs, so there is neither profit nor loss. Selling above this point produces profit; below it produces a loss. Break-Even Calculator
C
- Cash Flow
- The movement of money into and out of a business or household over time. Positive cash flow means more money is coming in than going out, which can differ from accounting profit. Cash flow vs profit guide
- Churn Rate
- The percentage of customers who stop using a product or service during a period. A lower churn rate means customers stay longer, which raises their lifetime value. CLV Calculator
- Compound Interest
- Interest calculated on both the original amount and the interest already added. Over long periods, compounding can make balances grow much faster than simple interest. Compound Interest Calculator
- Contribution Margin
- The money left from a sale after subtracting the variable cost of that sale. It is what each unit 'contributes' toward covering fixed costs and then profit. Break-Even Calculator
- Credit Score
- A number that summarizes how reliably a person has repaid debt. Lenders use it to decide whether to lend and at what interest rate; higher scores usually mean better borrowing terms.
- Credit Utilization
- The share of available credit you are using, written as a percentage of your limits. Lower utilization is generally viewed more favorably and can support a higher credit score.
- Customer Acquisition Cost (CAC)
- The average cost to gain one new customer, found by dividing sales and marketing spend by the number of new customers in the same period. CAC Calculator
- Customer Lifetime Value (CLV)
- The total gross profit a business expects from a customer over the whole relationship. Comparing CLV with CAC shows whether acquiring customers is sustainable. CLV Calculator
D
- Debt Avalanche
- A payoff strategy that targets the debt with the highest interest rate first while paying minimums on the rest. It usually minimizes total interest paid. Debt Payoff Comparator
- Debt Snowball
- A payoff strategy that targets the debt with the smallest balance first while paying minimums on the rest. The quick early wins can help with motivation. Debt Payoff Comparator
- Debt-to-Income Ratio (DTI)
- Monthly debt payments divided by gross monthly income, shown as a percentage. Lenders use it to judge how much additional debt a borrower can reasonably handle.
- Down Payment
- The portion of a purchase price paid upfront in cash, with the rest financed by a loan. A larger down payment reduces the loan amount and often the interest cost. Mortgage Calculator
E
- Emergency Fund
- Money set aside specifically for unexpected expenses, such as a job loss or urgent repair, so a surprise does not force you into high-interest debt. How to build an emergency fund
- Equity
- The portion of an asset you truly own, equal to its value minus any debt against it. Home equity, for example, is the home's value minus the remaining mortgage.
F
- Fixed Costs
- Business expenses that stay roughly the same regardless of how much you sell, such as rent, salaries, or insurance. They must be covered before a business turns a profit. Break-Even Calculator
- Fixed Interest Rate
- An interest rate that stays the same for the life of a loan, so the payment is predictable. It contrasts with a variable rate that can rise or fall over time.
G
- Gross vs Net
- Gross is an amount before deductions; net is what remains after them. Gross pay is before tax, while net (take-home) pay is what actually reaches your account. Salary to Hourly Calculator
I
- Inflation
- A general rise in prices over time, which reduces the buying power of money. A fixed amount buys fewer goods and services in the future than it does today. Inflation Calculator
- Interest Rate
- The cost of borrowing money, or the reward for saving it, shown as a yearly percentage of the amount. It is the core input to most loan and savings calculations.
L
- Liquidity
- How quickly an asset can be turned into cash without losing much value. Cash is the most liquid asset; property is far less liquid.
M
- Markup
- The amount added to a product's cost to set its price, expressed as a percentage of the cost. Markup and profit margin describe the same sale but use different denominators. Profit Margin Calculator
N
- Net Worth
- Everything you own (assets) minus everything you owe (liabilities). Tracking it over time is one of the clearest measures of overall financial progress.
P
- Payback Period
- The time it takes for an investment to earn back its initial cost. A shorter payback period generally means less risk, though it ignores returns after that point. ROI vs payback period guide
- Principal
- The original amount of a loan or deposit, separate from any interest. Loan payments are split between reducing the principal and paying interest.
- Private Mortgage Insurance (PMI)
- Insurance some lenders require when a home down payment is below a set threshold (often 20%). It protects the lender, not the borrower, and adds to the monthly cost. Mortgage Calculator
- Profit Margin
- The percentage of revenue that remains as profit after costs. Gross margin subtracts the direct cost of goods; net margin subtracts all expenses. Profit Margin Calculator
R
- Refinancing
- Replacing an existing loan with a new one, usually to get a lower rate, a different term, or lower payments. Fees and a longer term can offset the savings, so the full cost matters.
- Return on Investment (ROI)
- A simple measure of an investment's gain relative to its cost, shown as a percentage. It does not by itself account for how long the return took or how much risk was involved. ROI Calculator
V
- Variable Costs
- Business expenses that rise and fall with sales volume, such as materials or shipping. They are subtracted from price to find the contribution margin per unit. Break-Even Calculator
W
- Working Capital
- The cash and short-term resources a business has to cover day-to-day operations, calculated as current assets minus current liabilities. Tight working capital can strain even a profitable business. Working capital planning guide