Glossary

What the financial terms, acronyms and products in the audit mean, in plain English. Definitions are general and educational: they explain what something is, not whether it’s right for you.

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152 terms

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401(k): A retirement savings plan offered by many employers. Money is taken from your paycheck and invested for retirement, and your employer may add money too. The name comes from the section of the tax code that created it.
403(b)personal: A retirement savings plan like a 401(k), offered by schools, hospitals, churches and other nonprofit employers.
457 planpersonal: A retirement savings plan like a 401(k), offered mainly by state and local governments to employees such as teachers, police and firefighters.
529 college planpersonal: A savings account for education costs, run by a state. Money in it can grow without yearly tax, and withdrawals used for qualified education expenses are generally not taxed.

A

Accountable planbusiness: A written company policy for paying back owners or employees for business expenses they paid personally. When its rules are followed, such as handing in receipts on time, the repayment is usually not treated as taxable pay.
Accounts payablebusiness: The money your business owes to suppliers and vendors for things already received but not yet paid for.
Accounts receivablebusiness: The money customers owe your business for work or goods already delivered but not yet paid for.
Acquisitionbusiness: Taking over another business, or part of one, usually by paying its owners for it.
Advisor feepersonal: What a financial advisor charges for managing your investments or giving advice. It is often a yearly percentage of the money they manage, such as 1%, or a flat or hourly fee.
APR (annual percentage rate): The yearly cost of borrowing money, shown as a percentage of what you owe. It includes interest and some fees. A higher APR means the debt costs more.; Example: A credit card with a 24.99% APR charges about $250 a year for every $1,000 you carry on it.
Asset: Anything you own that has money value, such as cash, investments, a home, a car or a business.
Asset allocation: How your investments are split between different kinds, such as stocks, bonds and cash. The mix affects how much your investments can rise or fall.

B

Balance sheetbusiness: A financial statement that shows, on one date, what a business owns (assets), what it owes (liabilities), and what is left for the owners (equity).
Bankruptcy: A legal process for people or businesses who can't pay their debts. A court may wipe out some debts or set up a repayment plan. It stays on a credit report for up to 10 years.
Beneficiary: The person or organization you name to receive the money from an account or insurance policy when you die. On retirement accounts and life insurance, this name usually decides who gets the money, even if your will says something different.
Brokerage accountpersonal: A regular investment account, opened with an investment company, where you can hold stocks, bonds and funds. It has no special tax treatment and no limits on when you can take money out.
Business credit bureaubusiness: A company that collects information on how businesses pay their bills and loans, and turns it into business credit reports and scores. The main ones are Dun & Bradstreet (D&B), Experian Business and Equifax Business.
Business formalitiesbusiness: The routine steps that keep a business legally separate from its owners: separate bank accounts, keeping records, signing contracts in the business's name, and following its own agreements. Skipping them can let creditors go after the owners' personal assets.
Business valuationbusiness: An estimate of what a business is worth. A formal valuation is done by a qualified professional using financial records; an informal one is a rough estimate.
Buy-sell agreementbusiness: A contract between business owners that sets out what happens to an owner's share if they die, become disabled, retire or leave, including who can take it over and at what price. It is "funded" when money has been arranged in advance to pay for that share, often through insurance or savings.

C

C corporationbusiness: A business set up as a separate legal company that pays its own income tax. Owners hold shares, and profits paid out to them are taxed again on their personal returns.
Cash flow: What is left each month after your income pays for everything it has to. It comes from four numbers: monthly income (or revenue for a business), minus monthly expenses, minus monthly debt payments, equals your cash flow. Expenses and debt payments are counted separately so you can see what each one costs you. Working out your four numbers gives you the clarity to build a plan around your own situation instead of general rules.; Example: $6,000 income − $3,800 expenses − $1,200 debt payments = $1,000 a month of cash flow.
Cash flow index: A way some debt-payoff methods rank loans: the loan's balance divided by its minimum monthly payment. A lower number means the payment is large compared with what's owed, so paying that loan off frees up the most monthly cash flow for the money spent. It is a planning shortcut, not an industry standard, and it doesn't account for interest rates the way the debt avalanche does.; Example: A $6,000 car loan with a $300 payment has a cash flow index of 20; a $200,000 mortgage with a $1,400 payment has one of about 143.
Cash value (life insurance)personal: A savings amount that builds up inside some permanent life insurance policies. You may be able to borrow against it or withdraw it, but doing so can cost fees or interest and can lower the death benefit.
CD (certificate of deposit)personal: A bank account that pays a fixed interest rate if you leave the money in for a set time, such as 12 months. Taking money out early usually costs a penalty.
Charge-off: When a lender gives up on collecting a debt after many months of missed payments and writes it off as a loss. You still owe the money, and it hurts your credit report for years.
Collections: When an unpaid debt is handed to a collection agency, or a lender's own collection department, to recover the money. A collection account hurts your credit report.
Commercial credit filebusiness: The record a business credit bureau keeps on your business: its payment history with lenders and suppliers, public records, and a business credit score.
Commercial property insurancebusiness: Business insurance that covers buildings, equipment and inventory against damage or loss from things like fire, storms or theft.
Commissionpersonal: Pay based on what you sell or bring in, rather than a fixed amount, so it can change from month to month.
Compound growth: When earnings on your money start earning money themselves, so savings grow faster over time.
Continuity fundbusiness: Cash a business keeps aside to keep running through a disruption, such as a sudden drop in sales, a disaster, or losing a key person.
Cost of goods soldbusiness: The direct cost of the products or services a business sells, such as materials, inventory and the labor used to make them. It doesn't include general costs like rent or marketing.
Credit bureaupersonal: A company that collects information about how you borrow and repay, and sells it as credit reports. The three main ones in the U.S. are Equifax, Experian and TransUnion. Each may have slightly different information.
Credit freezepersonal: A free setting you can turn on at each credit bureau that stops new lenders from seeing your credit report, which makes it much harder for someone to open accounts in your name. You can lift it when you want to open new credit yourself.
Credit limit: The most you are allowed to owe on a credit card or line of credit at one time.
Credit monitoringpersonal: A service, often free from banks and card companies, that watches your credit report and alerts you when something changes, such as a new account opened in your name.
Credit reportpersonal: A record of your loans, credit cards and payment history, kept by each credit bureau. You can get free copies at AnnualCreditReport.com.
Credit scorepersonal: A three-digit number, usually from 300 to 850, that sums up your credit report. Lenders use it to decide whether to lend to you and at what rate. Higher is better.
Credit utilization: How much of your available credit you are using, as a percentage. It is your card balances divided by your credit limits.; Example: Owing $2,000 on cards with $10,000 of limits is 20% utilization.
Current assetsbusiness: What a business owns that is cash or could become cash within about a year: cash, money customers owe, inventory and prepaid expenses.
Current liabilitiesbusiness: What a business must pay within about a year: unpaid bills, card balances, loan payments due soon and taxes owed.
Customer concentrationbusiness: How much of a business's revenue depends on its biggest customers. If one customer brings in a large share, losing them would hurt more.
Cyber insurancebusiness: Business insurance that helps pay for the costs of a data breach, hack or ransomware attack, such as recovery, notifying customers and legal claims.

D

Debt avalanche: A debt payoff method: pay the minimum on every debt, and put every extra dollar toward the debt with the highest interest rate. When it's paid off, move that payment to the next-highest rate. It usually costs the least interest overall.
Debt elimination: A planned, step-by-step approach to paying off debts completely, usually by listing every debt, choosing a payoff order (such as the debt snowball, debt avalanche or cash flow index), and putting a set amount of cash flow toward it each month until each debt is gone.
Debt snowball: A debt payoff method: pay the minimum on every debt, and put every extra dollar toward the smallest balance first. When it's paid off, roll that payment into the next-smallest. Quick early wins help many people stay motivated, though it can cost more interest than the debt avalanche.
Debt-to-income ratiopersonal: Your monthly debt payments divided by your monthly income, as a percentage. Lenders use it to judge how much more debt you can handle.
Deductible (insurance)personal: The amount you pay yourself before your insurance starts to pay.; Example: With a $2,000 health insurance deductible, you pay the first $2,000 of covered care in a year.
Default: Failing to repay a loan as agreed, usually after several missed payments. A default can lead to collections, a charge-off or legal action, and hurts credit.
Depreciationbusiness: A way of spreading the cost of equipment, vehicles or buildings over the years they are used, for accounting and tax purposes. Tax rules sometimes allow more of the cost to be counted in the first year, so the timing of big equipment or property spending can change a year's tax bill.
Disability insurance: Insurance that replaces part of your income if illness or injury stops you from working. Short-term coverage typically pays for a few months; long-term coverage can pay for years, sometimes until retirement age.
Discretionary incomepersonal: The money left after essential expenses and required debt payments are paid. It is what you can choose to save, invest, use to pay debt faster, or spend. In this audit it's the result of your four numbers, shown as your cash flow.
Diversification: Spreading money across many different investments or assets so that one doing badly does less damage overall.
DSCR (debt service coverage ratio)business: How many times a business's operating income covers its required debt payments: income available for debt, such as net operating income, divided by the yearly (or monthly) principal and interest due. Above 1.0 means income covers the payments; lenders often look for about 1.25 or higher. The audit shows a version of it in the business cash flow section.; Example: $15,000 of monthly operating income ÷ $10,000 of monthly debt payments = a DSCR of 1.5.

E

EBITDAbusiness: Earnings before interest, taxes, depreciation and amortization: a business's profit with those four items added back. It's a rough measure of the cash the operations themselves produce, and it's widely used to compare businesses and to value them, often as a multiple of EBITDA. It leaves out real costs such as loan payments, taxes and replacing equipment, so it isn't the same as cash flow.; Example: $200,000 net profit + $30,000 interest + $50,000 taxes + $40,000 depreciation and amortization = $320,000 EBITDA.
EIN (employer identification number)business: A nine-digit number the IRS gives a business, like a Social Security number for the business. It is used on tax filings, bank accounts and business credit.
Emergency fund: Cash set aside only for surprises, such as a job loss, medical bill or urgent repair, kept where you can reach it quickly.
Employer matchpersonal: Money your employer adds to your retirement plan when you contribute.; Example: A 50% match on up to 6% of pay means that if you put in 6%, your employer adds 3%.
Entity typebusiness: The legal form of a business, such as a sole proprietorship, LLC, partnership, S corporation or C corporation. It affects taxes, paperwork and how well personal assets are protected.
Equipment leasebusiness: An agreement to pay to use equipment for a set time instead of owning it outright. Some leases let you keep the equipment at the end.
Equity compensationpersonal: Pay in the form of company stock, or the right to get it later. Common types are stock options, restricted stock units (RSUs) and employee stock plans (ESPP). Each has its own tax rules.
Escrow (mortgage)personal: An account your mortgage company keeps to pay your property taxes and home insurance for you. Part of each monthly mortgage payment goes into it.
Estate plan: The set of documents and choices that say who gets your money and property when you die, and who makes decisions if you can't. It usually includes a will, beneficiary choices, powers of attorney and a healthcare directive, and sometimes a trust.
Estimated taxes: Tax payments you send the IRS (and often your state) during the year, usually four times a year, on income that doesn't have tax taken out, such as self-employment or investment income. Paying too little or too late can mean penalties.
Expense ratio: The yearly fee a mutual fund or ETF charges, shown as a percentage of the money you have in it. It is taken out of the fund automatically, so you don't see a bill.; Example: A 0.5% expense ratio costs $50 a year for every $10,000 invested.
Extension (tax filing): Extra time, usually six months, to file a tax return. It gives more time to file, not to pay: any tax owed is still due by the normal deadline.

F

Factor ratebusiness: The way merchant cash advances and some short-term loans show their cost: a number like 1.3 that you multiply by the amount borrowed to get the total you repay. It is not an interest rate, and the yearly cost is often much higher than it looks.; Example: $10,000 at a 1.3 factor rate means repaying $13,000.
Final expensespersonal: Costs that come due when someone dies, such as the funeral, burial or cremation, and final medical bills.
Financial power of attorney: A legal document that names someone you trust to handle your money and paperwork if you can't, for example because of illness. A "durable" one keeps working if you become unable to make decisions.
Financial projectionsbusiness: Estimates of a business's future revenue, costs, profit and cash, usually by month or year, used for planning and when talking to lenders or investors.
Fixed salarypersonal: Pay that is the same amount each pay period, regardless of hours worked or sales made.

G

General liability insurancebusiness: Business insurance that pays if someone is hurt or their property is damaged because of your business, and helps cover legal costs.
General partnershipbusiness: A business owned by two or more people without forming an LLC or corporation. Each partner can be personally responsible for all of the business's debts.
Gross incomepersonal: Your income before any taxes or deductions are taken out. Your paycheck stub shows it as gross pay.
Gross marginbusiness: The share of each sale left after paying the direct cost of what was sold. It is (revenue minus cost of goods sold) divided by revenue.; Example: Selling something for $100 that cost $60 to make is a 40% gross margin.
Guaranteed paymentsbusiness: Set payments a partnership or multi-member LLC makes to an owner for their work, similar to a salary, paid whether or not the business makes a profit.

H

Healthcare directive: A legal document that says what medical care you want if you can't speak for yourself, and names someone to make medical decisions for you.
HELOC (home equity line of credit)personal: A line of credit that uses your home as security. You can borrow up to a limit as needed and pay interest only on what you use. Because your home backs it, missing payments can put the home at risk.
High-deductible health planpersonal: A health insurance plan with a higher deductible than most, which usually means lower monthly premiums. If it meets IRS rules, it lets you open and contribute to an HSA.
High-yield savings accountpersonal: A savings account, often at an online bank, that pays a higher interest rate than a typical bank savings account. Like other bank savings, it is usually FDIC insured.
HSA (health savings account)personal: A savings account for medical costs that you can open only if you have a qualifying high-deductible health plan. Money you put in lowers your taxable income, it can be invested and grow, and withdrawals for qualified medical expenses are not taxed. Unused money stays yours year after year.

I

Idle cashbusiness: Money a business holds beyond what it needs for operating costs and reserves, sitting in an account that earns little or no interest.
Income-producing assetpersonal: Something you own that pays you money regularly, such as a rental property, a business, or investments that pay interest or dividends.
Infinite banking: A financial strategy and philosophy developed by Nelson Nash in his book Becoming Your Own Banker. The idea is to control your own source of financing instead of relying on banks and lenders. In practice it uses a dividend-paying whole life insurance policy as the tool: you build up the policy's cash value over time, borrow against it for large expenses or opportunities, and repay those loans on your own schedule. Costs and risks to weigh: it takes years of premiums to build meaningful cash value, premiums are higher than term insurance, policy loans charge interest, and unpaid loans reduce the death benefit.
Inventorybusiness: Goods a business holds to sell, and the materials used to make them.
IRA (individual retirement account)personal: A retirement account you open yourself, not through an employer. With a traditional IRA, contributions may lower your taxes now and withdrawals are taxed later. There are yearly limits on how much you can put in.

J

Joint ownershippersonal: Owning an account or property together with someone else. With the common type ("right of survivorship"), the survivor automatically owns it when one owner dies, without probate.

K

Key personbusiness: Someone the business depends on so much, often the owner, that losing them suddenly would seriously hurt it. Businesses plan for this with written procedures, cross-training, savings, or insurance on that person's life.

L

Liability: Money you owe, or a legal responsibility to pay for harm or debts. In a business, it also means being legally responsible if something goes wrong.
Life insurance: Insurance that pays money to the people you name when you die. Term life covers a set number of years. Permanent life lasts for life and may build cash value. Coverage through work (group life) often ends when you leave the job and may be a small amount.
Lifetime incomepersonal: Income that keeps paying for as long as you live, such as Social Security or a traditional pension. It can't run out the way savings can.
Line of credit: A set amount a lender lets you borrow as needed, repay, and borrow again, like a credit card. You pay interest only on what you have borrowed.
LLC (limited liability company)business: A common business structure that can protect the owners' personal assets from the business's debts, when it is run properly. A single-member LLC has one owner; a multi-member LLC has two or more. By default it is taxed like a sole proprietorship or partnership, but it can choose to be taxed as a corporation.

M

Merchant cash advancebusiness: Money given to a business up front in exchange for a share of its future card sales or bank deposits, which are taken out daily or weekly (the "remittances"). Its cost is shown as a factor rate and is often very high compared with a bank loan.
Minimum payment: The smallest amount you must pay on a credit card each month to keep the account in good standing. Paying only the minimum means most of the balance keeps building interest.
Money market accountpersonal: A money market account is a bank savings account that usually pays more interest than basic savings. A money market fund is a low-risk investment fund that holds short-term debt. Both are often used for cash you want to keep safe and reachable.
Mortgagepersonal: A loan used to pay for a home, with the home as security. The monthly payment usually covers principal (paying down the loan) and interest, and often escrow for taxes and insurance.

N

Net worth: Everything you own (assets) minus everything you owe (liabilities).

O

Operating agreementbusiness: The written rules for how an LLC is owned and run: who owns what share, how decisions are made, how profits are split, and what happens when an owner leaves or dies.
Operating expensesbusiness: The regular costs of running a business, such as cost of goods, payroll, rent, utilities, software and marketing. In this audit, loan and lease payments are counted separately.
Opportunity fund: Money set aside separately from your emergency fund for goals and chances you want to act on, such as starting a business, investing in property or growing your company.
Owner's drawbusiness: Money an owner takes out of their business for personal use, separate from any salary. How draws are taxed depends on the business structure.

P

Partnershipbusiness: A business owned by two or more people who share profits and losses. Profits pass through to the partners' personal tax returns.
Payment termsbusiness: How long a customer has to pay an invoice, such as "net 30", meaning payment is due within 30 days.
PayNetbusiness: A commercial credit exchange: a system where equipment lenders and other business lenders share how businesses repay their loans and leases. Lenders that report to one help a business build a borrowing record.
Payroll taxesbusiness: Taxes based on wages: Social Security and Medicare (FICA), plus federal and state unemployment taxes. Employers pay their share and also hold back the employee's share, then send both to the government on a set schedule ("payroll deposits"). Late deposits bring penalties.
Pensionpersonal: A retirement plan, usually from an employer, that pays you a set monthly amount for life after you retire, based on your pay and years of work.
Personal guaranteebusiness: A promise by an owner to repay a business debt with their own money if the business can't. It lets the lender go after the owner's personal assets.
Pre-tax (traditional) accountpersonal: A retirement account where money goes in before income tax, lowering your taxable income today. You pay income tax when you take the money out in retirement.
Premium (insurance): The amount you pay, monthly or yearly, to keep an insurance policy active.
Prepaid expensesbusiness: Costs a business has paid in advance for something it hasn't used yet, such as a year of insurance or rent paid ahead.
Principal: The amount you borrowed, or still owe, not counting interest. Each loan payment is split between interest and paying down the principal.
Probate: The court process that confirms a will, pays final debts and hands out what's left after someone dies. It can take months and is public.
Professional liability insurancebusiness: Business insurance that covers claims that your advice or professional work caused a client to lose money.
Profit and loss statementbusiness: A financial statement that shows a business's revenue, costs and profit (or loss) over a period, such as a month or year.

R

Rebalancingpersonal: Adjusting your investments back to the mix you chose, because some parts grow faster than others over time and shift the balance.
Reconciled (books)business: Checking that the business's records match its bank and card statements, line by line, so the numbers can be trusted.
Refinancing: Replacing an existing loan with a new one, usually to get a lower rate, a lower payment or better terms. It can involve fees.
Rental incomepersonal: Money you receive from renting out property you own, such as a house, apartment or room.
Retirement plan feesbusiness: What it costs to run a workplace retirement plan: administration and recordkeeping fees for the plan itself, plus the investment fees inside the funds.
Return on investmentbusiness: How much an investment earns compared with what it costs, usually as a percentage. The payback period is how long it takes for the investment to earn back its cost.
Revenuebusiness: All the money a business brings in from sales before any costs are taken out.
Risk tolerancepersonal: How much up-and-down in your investments you can live with, both financially and emotionally, without changing your plans.
Roth accountpersonal: A retirement account where you put in money after paying income tax on it. If you follow the rules, the money and its growth come out in retirement without federal income tax. A Roth IRA is opened on your own; a Roth 401(k) is part of a workplace plan.

S

S corporationbusiness: A tax choice (an "election") that an eligible corporation or LLC can make with the IRS. Profits pass through to the owners' personal returns, and owners who work in the business pay themselves a reasonable salary. It can change how much payroll tax is paid.
SBA loanbusiness: A small business loan from a bank or lender that is partly guaranteed by the U.S. Small Business Administration (SBA). The guarantee can make lenders willing to offer longer terms. Lenders look at things like time in business, cash flow, credit and tax filings.
Self-employedpersonal: Working for yourself rather than an employer, such as running your own business or freelancing. No tax is taken out of your pay, so you usually make estimated tax payments and pay self-employment tax for Social Security and Medicare.
Shareholder agreementbusiness: A contract between the owners of a corporation that covers how it is run, how decisions are made, and what happens to shares when an owner leaves, dies or wants to sell.
Social Securitypersonal: The U.S. government program that pays monthly income in retirement, and to some people with disabilities and to survivors, based on your earnings history.
Sole proprietorshipbusiness: A business owned by one person that hasn't been set up as a separate legal company. It is the simplest structure, but the owner is personally responsible for all the business's debts.
Succession planbusiness: A plan for who will own or run the business when the current owner steps back, retires, sells, or can't continue, and how and when that happens.
Surrender chargepersonal: A fee some insurance policies and investment contracts charge if you cancel or take money out in the early years.

T

Tax credit: An amount taken directly off the tax you owe, dollar for dollar.; Example: A $1,000 credit lowers a $5,000 tax bill to $4,000.
Tax deduction: An expense that lowers the income you are taxed on. It saves you the deduction times your tax rate, so a $1,000 deduction at a 22% rate saves about $220.
Tax professional: Someone qualified to prepare tax returns and give tax advice, such as a CPA (certified public accountant), an enrolled agent (EA, licensed by the IRS) or a tax attorney.
Tax reservebusiness: Money a business or self-employed person sets aside, often a fixed percentage of each deposit, so the cash is there when taxes come due.
Tax return: The form you send the IRS (federal) and your state each year to report income and work out the tax you owe or the refund you are due.
Tax-advantaged accountpersonal: An account the tax rules treat more favorably than a regular account, such as a 401(k), IRA, Roth IRA, HSA or 529 plan. The benefit might be a tax break now, untaxed growth, or untaxed withdrawals, and each has its own rules and yearly limits.
Taxable accountpersonal: A regular savings or investment account with no special tax treatment. You pay tax each year on interest and dividends, and on gains when you sell.
Term loanbusiness: A loan for a set amount, repaid in regular payments over a fixed time, such as five years.
Trade accountsbusiness: Accounts with suppliers that let your business get goods or services now and pay later. Some suppliers report your payments to business credit bureaus, which helps build business credit.
Transfer-on-deathpersonal: A setting on bank accounts, investment accounts and, in some states, vehicles or a home, that names who receives it when you die. It passes to them directly, without going through probate court.
Treasury billspersonal: Short-term loans to the U.S. government, lasting from a few weeks to a year. They are considered very safe and are often used for cash you want to keep reachable.
Trust: A legal arrangement where one person or company (the trustee) holds and manages property for others (the beneficiaries) under written rules. A living trust can let property pass to heirs without probate court and keep the details private.

V

Velocity bankingpersonal: A debt payoff strategy that uses a line of credit, often a HELOC, as a hub for your money. Your income is deposited into the line to lower its balance, bills are paid from it, and lump sums from the line are used to pay down a mortgage or other loan faster. Most of the benefit comes from steady positive cash flow going to debt. Risks to weigh: line-of-credit rates are usually variable, a HELOC puts your home at risk if payments are missed, and it takes close tracking to work.

W

W-2 employeepersonal: Someone who works for an employer that takes taxes out of their pay. The W-2 is the yearly form your employer sends showing what you earned and the tax withheld.
Wealth reserve account: A wealth-building strategy that uses a specially designed whole life insurance policy, usually from a dividend-paying mutual insurance company, set up to build cash value. That cash value works as a reserve you can reach through policy loans or withdrawals for emergencies, opportunities, business needs or retirement income, and repaying a loan restores what's available to use again. It is an insurance contract, not a bank account, and is not FDIC insured. Costs and risks to weigh: policy loans charge interest and lower the cash value and death benefit until repaid, dividends are not guaranteed, and a policy that lapses or is surrendered with loans outstanding can create a tax bill.
Will: A legal document that says who gets your property when you die and, if you have young children, who would care for them. It goes through probate court, and it doesn't control accounts that already have a named beneficiary.
Withholdingpersonal: Income tax your employer takes out of each paycheck and sends to the government for you. You set it with a W-4 form, and it is worth checking after big life changes.
Workers' compensationbusiness: Insurance that pays medical costs and lost wages for employees hurt on the job. Most states require it once a business has employees.
Working capitalbusiness: Current assets minus current liabilities: roughly, the cash and near-cash a business has left to run day to day after paying what is due soon.