• Loss

    At the end of a financial period, if the costs are greater than the revenues, then the company has generated a loss. (Compare with Profit).

  • Margin

    Calculated as the profit expressed as a percentage of sales. The profit term (numerator) can be income after deductions for raw material costs and direct labor (gross margin) or profit after deductions for full cost.

  • Marginal Cost

    The increase in total costs that arises when one additional product is sold. (Also: Boundary cost)

  • Net Income

    Revenues minus all costs and tax (often called "The bottom line").

  • Net Income After Financial Items

    The profit that indicates how well the company is doing. This contains both the profit from operations and the profit or loss from the financing.

  • Net Present Value (NPV) Method

    The net present value method is used for investment calculations. Using a discount rate, future inflows and outflows of cash are recalculated to the present value. In this way, the net flows can be comparable even if they take place at different points in time.

  • New Share Issue

    Share capital is increased when new shares are issued. New capital is usually acquired by offering existing shareholders the opportunity to buy new shares. An alternative to this is the directed new share issue, the board then turns to one or several specific owners (a legal entity or physical person) with an offer to buy shares regardless of their existing holdings.

  • Nominal Value

    The original cash value of shares, etc.

  • Operating Assets

    That part of the company’s assets that is used on an ongoing basis in business operations.

  • Operating Capital

    Operating assets minus operating liabilities.

  • Operating Liabilities

    That part of a company’s debts that is assignable to ongoing operations.

  • Operating Income

    The Revenues from operations minus the costs of goods sold and overhead costs but excluding financial items and tax. Also used for this is EBIT.

  • Opportunity Costs

    Opportunity costs refer to the revenues that are foregone when a certain course of action is chosen. If it is possible to earn SEK 300 on one alternative and SEK 100 on another, one naturally chooses the first. If the second alternative were chosen, the opportunity cost would be SEK 200.

  • Opportunity Rate of Interest

    The average interest that one receives from invested capital.

  • Pay-off Method

    A simple method for investment calculations. It is to calculate how long it will take to recoup an invested amount. The alternative that restores the money first is favorable.

  • Prepaid Income and Expenses

    These terms are used in the annual financial statements. An example of prepaid income is when a customer pays in advance but the company has not yet delivered the goods or services. Rent that is paid quarterly in advance by a company pays is an example of a prepaid expense.

  • Profit

    If revenues at the end of an accounting period are greater than costs, then the company has generated a profit. (See also Loss).

  • Profit Mark-up

    The profit mark-up is used in calculations in order to cover general business risk, warranties, and profits that represent a favorable yield on operating capital. The profit mark-up is added to the full cost.

  • Profitability

    The surplus (revenues minus costs) from an activity expressed in relation to invested capital.

  • Provision for Claims

    A financial reserve to account for exercised guarantees.