Explore key financial terms and definitions to better understand business reports and make informed decisions.
The individual in charge of managing finances, including budgets, accounting records, and cash flows.
A trader in Quetta may rely on this manager to manage internal accounts, prepare financial statements, and file tax returns.
These are amounts the company owes to suppliers for goods or services received. They are usually paid within a short time.
The number of days a business takes to pay its suppliers after receiving goods or services.
A trader in Faisalabad might receive goods on credit and typically settle dues within 30 days.
These are amounts customers owe the business for goods or services bought on credit. A service company waiting to receive payment after completing a job has accounts receivable.
The average time it takes for a business to receive payment from its customers after a sale.
For example, a wholesaler supplying grocery stores in Lahore might wait 45 days on average for clients to pay their invoices.
Accrued interest is the unpaid interest on loans that builds up over time. A manufacturer with a bank loan shows the growing interest owed as accrued interest until it is paid.
These are accounting costs that spread the price of machines or patents over time without using cash. A service provider adds these back because they reduce profit but don’t reduce cash.
This is new borrowing to finance long-term investments like equipment or buildings. A manufacturer taking a new project loan increases cash for buying machines.
This is borrowing more money to cover short-term business costs. A trader borrowing extra working capital gets cash to pay suppliers or buy inventory.
Administration expenses cover office costs and staff salaries not directly tied to making products. Paying for office electricity or clerical workers in a manufacturing firm fits here.
Asset management ratios measure how efficiently a business uses its assets to generate sales or revenue. A trader, for example, can use these ratios to see how quickly inventory is sold and how well the shop's assets are supporting daily operations.
Assets are things the business owns that have value. For example, a services company owns computers and office furniture counted as assets.
This is borrowing money by withdrawing more than the balance in a bank account, creating a negative balance. Interest is charged on this overdraft until repaid.
This is paying back money borrowed when the bank account goes below zero. A manufacturer clearing their overdraft improves their cash position but uses cash.
Break-even point units per month is the number of units a business must sell monthly to cover all costs without profit or loss. Selling more than this number means the company earns profit.
The break-even point is the sales level at which a business earns just enough to cover all its costs, with no profit or loss. For example, a small manufacturing SME that spends Rs. 100,000 on materials, rent, and salaries will break even when it sells enough products to make exactly Rs. 100,000 in revenue
This is the monthly payment a business makes for using a rented building or workspace. A service provider renting an office in Lahore for operations would record this as a fixed monthly business expense.
This is the rent paid for business premises when the company doesn’t own the building. A trader renting a shop pays this cost monthly or yearly.
This is money spent to buy or improve fixed assets like machinery or buildings. A manufacturer buying a new machine is making a capital expenditure.
This is the money the business has on hand or in bank accounts ready for use. A manufacturer’s petty cash and bank savings are included here.
This is the net cash spent or earned from buying or selling assets. For a trader, spending cash to buy a delivery vehicle is a negative investing cash flow.
This is the amount of cash carried over from the previous period. For a service business, this is the starting cash available for the new month.
This is the closing cash balance at the end of the period, which becomes the next period’s opening cash. For a trader, it shows how much cash is on hand going into the new accounting period.
This is the net cash gained or spent on loans, repayments, and equity changes. For an agricultural firm, this shows whether borrowing or equity raised more cash than repaid or paid out.
This is the actual cash generated from running the core business after adjusting for changes in assets and liabilities. An agricultural firm’s operating cash shows how much money farming activities brought in after expenses.
The top authority in the business who makes strategic decisions and leads the organization.
In a small-scale manufacturing setup in Lahore, the owner may also act as the manager, marketing head, and decision-maker.
Civil works or building costs refer to the expenses involved in constructing or setting up physical structures for the business. For instance, a manufacturer in Karachi building a warehouse for storing raw materials would include the costs of walls, roofs, plumbing, and electrical wiring under this term
The cost a business incurs to maintain communication, such as phone, internet, and messaging services.
For a small services company offering home-based tutoring in Lahore, this could include mobile packages and broadband bills used to coordinate with parents and students.
This covers phone, internet, and other communication service costs. A trader’s phone bills and internet charges for online orders are included here.
A support staff member responsible for using computers to manage data entry, records, and documents.
A manufacturing unit in Hyderabad may have a computer operator input daily production logs and print shipping labels.
Contribution margin per unit is the money left from sales after subtracting variable costs, used to cover fixed costs and profit. For example, if the sale price is 10,000 PKR and variable cost is 6,000 PKR, the contribution margin is 4,000 PKR.
Contribution margin ratio shows what percentage of each sale contributes to covering fixed costs and profit. If the margin is 4,000 PKR on a 10,000 PKR sale, the ratio is 40%.
This is the money spent on raw materials needed to make products. For instance, a manufacturer buying fabric to produce clothing records this as raw material cost.
This covers costs related to manufacturing or processing goods, like paying factory workers and utility bills. A manufacturer’s electricity and labor used during production are examples of these costs.
These are costs for packaging and labeling finished products before sale. For example, printing labels and packing boxes for a trader’s goods fall under this category.
Cost of sales includes all direct costs needed to produce or deliver what a company sells. For example, an agricultural business pays for seeds and labor that go directly into growing crops, which are part of cost of sales.
Current assets are things expected to be used or converted into cash within one year. This includes cash, inventory, and money owed by customers in a trader’s business.
Current liabilities are debts the company must pay within one year. This includes short-term loans and unpaid bills, such as money owed by a trader to suppliers.
Current ratio indicates whether a business can pay its short-term debts using current assets. A ratio above 1 means a company can meet its immediate liabilities.
Days sales outstanding shows the average time customers take to pay after a sale. A 45-day average means customers typically pay after one and a half months.
Debt is money borrowed that must be repaid with interest over time. For instance, a manufacturer taking a bank loan to buy new equipment incurs debt.
Debt management ratios show how much a business relies on borrowed money and how well it can handle its debt payments. For a manufacturing business, these ratios help assess whether it’s taking on too many loans compared to its ability to repay them from profits.
The debt ratio shows how much of a business is financed by loans compared to owners’ money. For example, a debt ratio of 0.6 means 60% of assets come from loans, which can increase risk but might boost returns, such as in a manufacturer expanding with borrowed funds.
This reflects the gradual loss of value of physical and intangible assets over time. Machinery in a manufacturer loses value yearly (depreciation), and patents lose value similarly (amortization).
The amount of business profit withdrawn by the owner for personal use in the form of cash.
In a services business run by a sole proprietor in Lahore, the owner might draw part of the year’s earnings to support household expenses.
This is cash withdrawn by the owner from the business profits. An agricultural business owner taking money out reduces the cash available for farming.
EBIT is the profit a company makes before paying interest and taxes, showing operating performance without financing effects. For example, a services business’s EBIT excludes loan interest and tax payments.
This is the profit left after subtracting interest but before paying income tax. It shows the amount on which tax will be applied.
This is the cost of electricity used in business operations, such as lighting, machinery, and office equipment. A trader with a storefront may incur this expense to power lights, fans, and billing systems.
Any person formally hired by the business to perform a job, whether in operations or support roles.
In a service-based SME like a call center, this includes both the call agents and the HR team managing them.
Changes in this inventory affect cash flow, depending on whether items are purchased or used.
Equipment spare part inventory means keeping extra machine parts on hand to quickly fix any breakdowns and avoid stopping work. A manufacturer in Sialkot, for instance, keeps spare belts and motors ready to maintain smooth production.
Equity is the owner’s or investors’ money invested in the business in exchange for ownership shares. A service business in Islamabad might use equity from partners to fund expansion without owing repayments.
A balance sheet is a financial statement that shows what a business owns (assets), what it owes (liabilities), and the owner's equity at a specific point in time. For example, a manufacturing SME can use the balance sheet to check if it has enough assets, like machines and cash, to cover its debts and keep the business stable.
A cash flow statement is a report that shows the money coming in and going out of a business over a period of time. For example, a trader SME can use it to see how much cash they have from sales, payments to suppliers, and other activities to ensure they can pay bills and keep the business running smoothly
The income statement shows a business’s revenues, costs, and profits over a specific time period, usually monthly, quarterly, or yearly. For a service provider, it helps track how much money is earned from services and what expenses reduce that income to arrive at net profit
Ratio analysis involves using financial ratios to evaluate a business’s performance, efficiency, and financial health. For instance, a trading SME might use the current ratio to check if it has enough cash and assets to pay upcoming bills and debts
Financing activities involve transactions related to raising or repaying money, such as taking loans or issuing shares. For example, a trader SME’s financing activities include borrowing funds from a bank or paying back a short-term loan.
Finished goods inventory consists of products that have been fully made and are ready to be sold. For example, a bakery in the services sector may keep packaged bread and pastries ready for sale each morning.
Fixed assets are long-term things used in the business, like buildings and machines. A manufacturing company’s factory equipment is part of fixed assets.
Fixed assets turnover ratio assesses how well a business uses fixed assets to generate revenue. A manufacturer with higher turnover uses its machinery and buildings efficiently.
Fixed costs are expenses that stay the same regardless of production volume, such as rent or salaries. A factory’s monthly rent remains fixed whether it produces 10 or 1,000 units.
Furniture and fixtures include items used to furnish and set up a functional workspace, such as desks, chairs, lighting, and display shelves. A trader running a retail shop might use display racks, counters, and lights to organize and present products to customers.
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These are indirect costs needed to run the business and sell products, such as rent and marketing. For example, the salary of office staff in a services company is part of these expenses.
Gross profit is what’s left when you subtract total cost of sales from revenue. It shows the money earned after direct costs but before other expenses, like in an agricultural business selling crops after paying for seeds and labor.
Refers to workers directly involved in producing goods or delivering services.
In a textile manufacturing unit, this includes the tailors and machine operators who actually make the garments.
Indirect labor expense refers to the cost of employee work that supports production or operations but doesn’t directly produce goods or services. For example, a trader's storekeeper or accountant is part of indirect labor because they help the business run but don’t sell products directly.
Initial financing is the initial sum of money raised to start a business. This might include loans and personal savings used by a trader in Karachi to buy inventory and set up shop.
Intangible assets are non-physical things like licenses or patents that still add value. For example, legal licenses held by a trader count here.
This is interest paid on loans taken for big investments like machinery or buildings. A manufacturer paying interest on a loan to buy new equipment incurs this expense.
This interest is on loans used for everyday business needs like inventory or payroll. For example, an agriculture business paying interest on a loan for seasonal inputs.
This is interest charged when a company withdraws more money than it has in its bank account. If a trader’s account goes negative, the bank charges this interest.
The income a business earns from interest on funds kept in its bank account.
A manufacturer with a high balance in a business savings account might receive periodic mark-up from the bank, adding to their passive income.
IRR is the annual percentage that shows how profitable an investment is by balancing future profits with the initial cost. Investors consider a high IRR a sign of a good opportunity, like funding a new textile factory.
Inventory refers to all goods and materials a business holds for production or sale, including raw materials, spare parts, and finished items. A trading business selling electronics may have inventory that includes imported devices, batteries, and accessories. Use ‘number of months’ to indicate time period, e.g. for half month, use “0.5” for 60 days, use “2” months. The time period for which the inventory will be held has an associated cost of storage, handling and safety
Inventory turnover ratio tells how many days it takes to sell all inventory. If a trader sells stock in 30 days, the ratio is 30, showing how fast inventory moves.
Investing activities refer to the purchase or sale of long-term assets like property, equipment, or investments. For example, a manufacturer buying a new machine for production is recording an investing activity.
This means raising money by selling ownership shares in the business. A service company issuing shares gets cash from investors to expand operations.
Land is property owned by the business used for operations. It is a permanent asset that does not lose value over time.
These costs cover registration, permits, and staff training before operations begin. They provide future benefits and are treated as intangible assets.
These are expenses for legal services, obtaining government licenses, and training staff before or during business operations. A new restaurant in the services sector might spend on food licenses, legal fees, and staff training before opening.
Liquidity ratios show a business’s ability to pay its short-term debts using its current assets like cash or inventory. For instance, a service-based SME can use the current ratio to check if it has enough cash and receivables to cover upcoming bills and salaries.
A type of financing borrowed over a period longer than one year, usually to buy assets like land or machinery.
An agriculture business expanding into mechanized farming may use a long-term loan to purchase tractors or irrigation systems.
The total time, in years, a business has to repay a long-term loan.
If a trader in Multan takes a loan for five years, they will make periodic payments over that term.
The annual interest rate charged on the amount borrowed through a long-term loan.
For instance, a 12% markup on a loan for factory equipment means the business pays that rate yearly on the outstanding amount.
Machinery and equipment are large tools or machines a business uses in its daily operations to produce goods or deliver services. For example, a textile manufacturer in Pakistan may use industrial sewing machines and fabric cutters as part of its machinery and equipment.
This is the expense of regularly servicing and repairing machines to keep them running efficiently. For example, a factory in Pakistan may spend on oiling, part replacements, or technician fees to maintain equipment.
These are costs involved in converting raw materials into finished goods, such as wages, utilities, and machine operations. A garments manufacturer would include stitching labor and machine electricity bills under this cost.
This role is responsible for creating and executing plans to attract customers and grow sales.
In a services firm offering event planning in Karachi, the marketing manager might run social media ads and attend wedding expos.
This is the highest percentage of production capacity a business plans or expects to reach, even if full capacity is technically possible. A manufacturer might aim to cap usage at 90% to avoid overloading machinery or staff.
This is the highest number of units a business can produce or sell within a specific time frame. For example, a small-scale manufacturer in Pakistan might be capable of producing up to 5,000 units of a product each month.
This is the total cash left after all operations, investments, financing, and owner withdrawals. A manufacturer’s net cash shows how much money is available to spend or save next.
NPV calculates the difference between the current value of future earnings and the initial investment cost. A positive NPV means a project, such as a small service business, is financially beneficial.
Net profit is the total money a business earns after paying all costs, interest, and taxes. For example, a manufacturer sees this as the final amount earned after selling products and paying all expenses.
This is the final profit or loss after all costs and taxes are deducted. It shows the true financial result for the period, often called the “bottom line.”
A junior support staff member who assists with routine tasks like serving tea, filing, and delivering documents.
In a trader's office in Peshawar, the office boy might also handle basic errands like picking up office supplies or banking cheques.
Office equipment includes devices and tools used for everyday office tasks, such as computers, printers, and telephones. A service-based SME like a travel agency in Pakistan may use computers and printers to handle bookings and issue travel documents.
This term covers the everyday supplies and services needed to keep an office functional and presentable.
For a trader operating a wholesale shop in Karachi, it may include things like notebooks, cleaning staff wages, or refreshments for visiting clients.
This includes small, recurring office costs like stationery, cleaning, and refreshments. For example, a manufacturing office buying paper and cleaning supplies records these expenses.
Office vehicles are transport assets used by staff or management for administrative tasks related to the business. For example, a services business might provide a vehicle for supervisors to travel between client locations or attend meetings.
These are the ongoing costs of running and maintaining company-owned vehicles.
A manufacturer in Faisalabad might include petrol, oil changes, and workshop repairs for delivery vans that transport finished goods.
These are costs to operate company vehicles, such as fuel, maintenance, and insurance. A service company’s vehicle used for client visits would have these expenses.
Operating activities are the day-to-day business actions that generate cash, such as selling products or paying wages. For instance, a manufacturing SME’s operating activities include cash received from customers and cash paid for raw materials and salaries.
Direct labor costs are wages paid to workers who make the products or deliver services. Machine operators in a manufacturing plant would be paid under this expense.
This includes expenses to keep production machines working, such as repairs and regular servicing. A service company using specialized equipment pays these costs to avoid breakdowns.
Operating income is the profit earned from regular business activities after subtracting operating expenses from gross profit. It shows core profitability, like a trader’s earnings before interest or taxes.
The total number of days in a year that a business operates and earns revenue.
A manufacturing unit in Gujranwala might operate 6 days a week except on public holidays, giving them about 300 operational days annually.
A person responsible for overseeing the daily workings of business operations and ensuring smooth production.
In a trading business in Rawalpindi, the operations manager may coordinate shipments, manage staff schedules, and track supplier performance.
Other income includes money earned outside the main business activities, such as interest or rental income. A manufacturer renting out part of their warehouse earns other income.
These are debts due after one year, such as loans for big investments. For example, a manufacturer’s loan to buy machinery is a long-term liability.
Paid-up capital is money invested by owners in exchange for shares. It is the initial and additional funding for the business.
Payback period is how long it takes to recover the initial investment from profits. For example, if a manufacturing unit costs $100,000 and earns $25,000 profit yearly, it takes 4 years to pay back.
Pre-operating costs are the expenses a business incurs before officially starting operations, such as setup, planning, or registration fees. For example, an agriculture-based startup may spend on soil testing, legal consultation, and team training before farming begins.
These are expenses before the business starts, such as planning and setup costs. They are recorded as assets and spread out over time.
This is rent paid in advance for future use of a building or space. It is recorded as an asset because it benefits future operations.
This is the cost of printing labels and packaging finished goods to make them sale-ready. A spice trader might include the cost of printed pouches and branding stickers in this category.
This shows the percentage of total production ability currently being used by a business. If a manufacturer can produce 10,000 units a month but is only producing 7,000, the utilization is 70%.
This reflects how much the use of production capacity increases over time. For example, if a factory moves from 50% to 65% utilization in a year, the growth rate indicates improved operational efficiency.
The team leader who supervises the entire production process and ensures targets are met.
A manufacturer in Sialkot making sports goods would rely on the production in-charge to oversee machine efficiency and quality control.
Payments made to external experts for specialized business services.
For example, a services firm in Islamabad may hire an accountant during tax season or consult a lawyer to register their business.
These are payments made to outside experts like lawyers, auditors, and consultants. For instance, a services firm hiring a legal advisor pays professional fees.
Profit margin on sales shows the percentage of profit made from each sale after expenses. If a product sells for 100 PKR and the profit is 20 PKR, the profit margin is 20%.
Profitability ratios measure how well a business is generating profit from its sales, assets, or equity. For example, a manufacturing SME can use the net profit margin to see how much profit it makes after all expenses from selling its products
A project loan finances fixed assets like buildings or machinery. It is paid back over several years with interest.
This is the cash used to repay the original amount borrowed for buying long-term assets. A trader repaying this loan reduces their debt but also uses up cash.
Project viability or return refers to how likely a business project is to succeed and how much profit it can generate compared to the money invested. For example, an agriculture SME assessing whether a new drip irrigation system will increase crop yield enough to cover its cost and earn extra income is checking the project's viability and return.
Money spent to promote and advertise a product or service to potential customers.
An agriculture business selling organic fertilizer in Multan might spend on local newspaper ads or banners in rural markets.
Quantity produced per month is the total number of units a business manufactures each month. Tracking this helps a service provider plan capacity and delivery.
Quick ratio is a stricter measure than the current ratio, checking if the company can pay short-term debts without selling inventory. A service firm with enough cash and receivables to cover debts has a quick ratio above 1.
Raw materials are items bought but not yet used in production. A trader or manufacturer stores these until needed for making products.
The land or buildings used for business purposes that are not owned but rented by paying regular rent. You can specify if your business space is rented or purchased here.
This is the minimum profit investors expect based on their investment risk. Owners in a trading business look for returns that justify the money they put in.
Retained earnings are profits kept in the business instead of paid out as dividends. They are reinvested to help the company grow.
ROA measures how effectively assets generate profit. A manufacturer with $500,000 in assets earning $50,000 profit has a 10% ROA, showing efficient use of resources.
ROE indicates the profit earned on shareholders’ investments. If a trader invests $50,000 and earns $10,000 profit, the ROE is 20%.
ROI is the percentage of profit made per dollar invested. For example, if a service company invests $10,000 and earns $2,000 profit, its ROI is 20%.
Revenue is the total money a business earns from selling its goods or services before any costs are taken out. A trader’s shop, for instance, counts all sales money received as revenue, which appears at the top of their income statement.
ROA measures profit generated from assets. For example, a service company using 1 million PKR in assets to make 100,000 PKR profit has an ROA of 10%.
ROE shows how much profit is earned for every rupee invested by owners. If a manufacturer earns 15,000 PKR on 100,000 PKR equity, ROE is 15%.
ROI measures overall profitability by comparing profit to total investment. It helps businesses, like traders, decide if their investments are worthwhile.
This is the price at which one unit of a product or service is sold to customers. For example, if a farmer sells one kilogram of rice for Rs. 250, that is the sale price per unit.
A person hired to ensure the security of the business premises and personnel.
For a cold storage facility in an agricultural area like Bahawalpur, the guard may be responsible for night-time security and monitoring visitor access.
Shareholders’ equity is the owners’ share in the business after all debts are paid. It includes money invested plus profits kept in the company.
Subtotal is the sum of a group of related expenses before calculating the next financial figure. It helps organize expenses like all operating costs together before finding operating income.
This subtotal adds up all interest and finance-related expenses. It helps calculate earnings before tax by deducting these costs.
Tax is the money a business pays to the government based on its earnings. All applicable business income taxes are included here.
This is the total value of everything the company owns, both short- and long-term. It reflects all resources available to the business.
Total assets turnover ratio measures how effectively all assets, both fixed and current, are used to produce sales. A high turnover means the business is maximizing asset use to earn revenue.
This is the sum of all debts and owners’ investment in the business. It must equal total assets, reflecting the basic accounting balance.
This is the full amount spent directly on producing and delivering goods or services. It combines raw materials, labor, and other direct expenses a business faces, like a trader’s buying and handling costs.
This is the total of all assets expected to be used or converted to cash within one year. It shows how quickly the company can meet short-term needs.
This is the total of all short-term debts due within one year. It shows the company’s immediate financial obligations.
Total equity combines paid-up capital and retained earnings. It shows the total investment by owners in the company.
This is the combined value of all long-term physical assets owned by the company. It represents the company’s investment in property and equipment.
This is the sum of all intangible assets providing future benefits. It is reported separately from physical assets.
Total investment combines capital costs and working capital, representing all funds needed to launch and operate the business until it becomes self-sustaining. For example, an agricultural firm investing in land, machinery, and daily expenses counts all these under total investment.
This is the total amount owed over the long term. It shows how much the business depends on long-term borrowing.
This covers costs related to business travel, including transport, fuel, accommodation, and tickets. For example, an agriculture supplier visiting farms across Punjab would record travel-related costs under this expense.
Variable costs change with production volume, like the cost of raw materials. If a manufacturer pays 500 PKR for materials per unit, making more units raises total variable costs.
This is the cost of water used in business activities like production, cleaning, or for staff facilities. For instance, a food processor may need clean water for both ingredient preparation and sanitation.
WACC shows the average cost of all funds used by the business, combining loans and equity costs. This helps companies, like agricultural firms, understand their overall financing expenses.
Hands-on staff who carry out physical tasks like assembling, loading, or packaging.
In an agriculture supply business, workers might pack seeds or fertilizers for sale to farmers.
A short-term loan used to cover daily business needs like inventory, salaries, or bills.
A manufacturer in Karachi may take this loan to buy raw materials when waiting for payments from customers.
This is cash paid to reduce loans taken for daily business expenses. A service company repaying working capital loans reduces their short-term debt.
The agreed duration for repaying a working capital loan, often less than one year.
Even though it's short-term, some businesses, like a seasonal trader in Gilgit, may negotiate a repayment period of 6 to 12 months.
The interest charged on funds borrowed for short-term working capital needs.
A small services company in Islamabad may pay 14% per year as markup on a loan to cover temporary payroll shortages.
This includes other fixed monthly expenses not listed separately but necessary for running the business.
For example, paying PKR 2,000 per month for accounting software would fall under other fixed costs.
This includes other changing costs that come with making or selling more products.
A manufacturer paying extra overtime wages or temporary storage fees would include those as other variable costs.
Break-even points (units) are the number of products a business needs to sell to cover all its costs, resulting in zero profit or loss.
For example, if a furniture maker must sell 150 chairs to pay for all costs, then 150 is their break-even units.
Break-even revenue is the amount of money a business must earn from sales to cover all its costs without making a profit or loss.
For a furniture manufacturer, this means selling enough chairs and tables so that the total sales money exactly pays for materials, labor, rent, and other expenses.
This is the monthly payment for using a shop, factory, or office space.
A manufacturing unit renting a small workshop for PKR 40,000 each month counts that as building rent.
Cost of production growth rate tells how much the cost of making the product goes up over time.
If the cost of timber and labor rises by 4% annually for a furniture factory, that’s their production cost growth rate.
Depreciation expense shows how much value an asset like a machine loses over time.
If a furniture-making machine costs PKR 600,000 and loses PKR 10,000 in value each month, that’s the depreciation.
Direct labor refers to wages paid to workers who make the product with their hands or tools.
Paying a carpenter PKR 1,500 for each chair built is a direct labor cost.
Fixed expenses are costs that stay the same every month, no matter how much the business produces or sells.
For example, a manufacturer pays PKR 50,000 monthly rent whether they make 10 or 100 pieces of furniture.
Fixed marketing expenses are regular monthly costs for promoting the business or product.
A furniture business paying PKR 10,000 each month for online ads and brochures counts this as fixed marketing.
These are monthly utility bills that don’t change much, regardless of how much is produced.
A manufacturer paying PKR 8,000 every month for lighting, phone, and water includes this under fixed utilities.
This is the regular payment made to keep business insurance active.
For example, a manufacturer pays PKR 5,000 monthly for insurance covering fire or damage to machinery.
A loan installment is the fixed amount a business pays monthly to repay a loan.
If a manufacturer took a PKR 500,000 loan and pays PKR 25,000 every month, that’s the loan installment.
This is the cost of transporting the product from the factory to the customer or store.
A furniture company paying PKR 5,000 monthly for delivery vans includes that as a logistics expense.
The name of the project refers to the official title or label given to a specific business or activity.
For example, a furniture-making SME might name its business “WoodCraft Tables” to represent its product focus.
Packaging cost is the money spent on packing materials to protect and present the product.
A manufacturer spending PKR 300 on boxes and wrapping for each table includes that as packaging cost.
Price per unit is the amount of money charged for selling one item of the product.
A furniture manufacturer selling a wooden chair for PKR 5,000 has a unit price of PKR 5,000.
This is the tax paid to the government for owning a building or land used for the business.
A factory owner paying PKR 3,000 per month in property tax includes it in fixed expenses.
Raw materials are the basic items used to make the product.
For a furniture manufacturer, timber, nails, and polish are the main raw materials.
These are regular monthly payments made to employees who work full-time or are permanently hired.
A manufacturer paying PKR 30,000 each to five carpenters is covering permanent staff salaries.
Sales commissions are payments given to people for successfully selling the product.
If a salesperson gets PKR 500 for every wardrobe sold, that’s a sales commission.
Sales price growth rate shows how much the selling price of a product increases over time, usually yearly.
If a manufacturer raises the price of a cupboard by 5% every year, that’s their sales price growth rate.
This is the total quantity of products a business sells in one month.
If a manufacturer sells 100 handmade desks in May, then 100 is the total units sold that month.
Variable expenses change depending on how much the business produces or sells.
If a manufacturer makes more tables in a month, they spend more on wood, labor, and delivery.
These are utility costs that increase or decrease based on how much production happens.
For example, a manufacturer using more electricity during high production months will have higher variable utility bills.
Spending on constructing or buying physical structures like offices, warehouses, or production units.
A manufacturer in Gujranwala building a production hall will include construction costs as part of this investment.
Depreciation refers to the gradual decrease in the value of a physical asset as it ages or gets used. For example, if you buy a car for your business, its value goes down each year as it gets older. Depreciation helps businesses account for this loss in value for tax and financial purposes.
Money spent on furnishing and equipping a workspace with necessary non-machinery items.
A services firm in Islamabad setting up a new office would include desks, lighting, and shelving under this term.
The initial value of an asset refers to how much it cost to buy the asset when it was new. This value is used as the starting point for calculating depreciation or amortization. For example, if you buy a computer for your business, the initial value is how much you paid for it before it starts losing value over time.
An intangible asset is something valuable that can’t be touched, like patents, trademarks, or software. For example, a manufacturer’s patent on a product formula is an intangible asset important for business value.
Land is property owned by the business used for operations. It is a permanent asset that does not lose value over time.
Costs related to obtaining regulatory approvals, business licenses, and initial staff training.
A food trader opening a retail outlet in Lahore may need to pay for food authority certification and hire a trainer to educate staff on hygiene.
The expense of acquiring machines and tools essential for production or service delivery.
A rice mill in Punjab investing in automated processing machines would categorize that under machinery and equipment.
Refers to electronic and mechanical devices used in day-to-day office functions.
This includes items like printers, computers, or photocopiers in a services company in Peshawar.
The cost of purchasing vehicles used for official business needs.
A trading company in Karachi might buy a pickup for goods delivery, categorized here.
Expenses incurred before business activities officially begin.
For a manufacturing startup in Sialkot, this might include travel for equipment inspection or salaries paid during the setup phase.
Accounts receivable at the end of the year refers to the outstanding payments that customers owe to the business for products or services delivered during the year. It is considered an asset as it represents money expected to be received in the future.
This is the total interest a business pays on loans or borrowed money in one year. For example, a farmer pays annual interest on a loan taken to buy farming equipment.
Annual bank charges include all the fees and charges levied by financial institutions for various banking services. This can include service fees, loan interest, transaction fees, and other banking-related costs.
The annual interest paid amount refers to the total interest expense a business incurs over a year for borrowed money. It includes interest on loans, credit lines, or any other form of debt the business holds.
Annual office rent refers to the yearly expense a business incurs for leasing office space. This cost is typically fixed and must be paid regularly, often on a monthly or quarterly basis.
Annual office supply costs cover the total spending on office-related materials that a business needs to run its daily operations. These supplies are used for administrative tasks and general office needs.
This is the yearly cost of renting the space where goods are made or produced. A manufacturer pays annual rent for their factory space to keep production running.
Annual rent for a plant or production facility refers to the yearly cost of leasing the space used for manufacturing or production purposes. It’s a fixed cost that must be paid regardless of how much the business produces or sells.
Annual repair and maintenance costs include the total spending on fixing and maintaining business equipment, machinery, or buildings. These costs are necessary to keep assets in good working condition and avoid disruptions.
Annual salary and wage expenses refer to the amount a business spends on compensating its employees. This includes all forms of employee compensation, including base salaries, bonuses, and other wage-related costs.
Annual sales, also known as revenue, represent the total income a business generates from its core operations over a year. This figure includes all sales, whether cash or credit, but does not account for any expenses or costs.
Annual sales and marketing costs are the expenses incurred by a business to market and sell its goods or services. This includes advertising, promotions, sales commissions, and any other expenses aimed at generating sales.
Annual utility expenses are the costs associated with the usage of essential services required to run the business, such as electricity, water, gas, and telecommunications. These expenses are often recurring and necessary for day-to-day operations.
Cash and bank balance at the end of the year shows how much cash the business has available in its accounts. It is a key indicator of the company’s liquidity and ability to meet short-term obligations.
The cash ratio shows if a company can cover its short-term debts using only cash or cash equivalents. A Pakistani agriculture business looks at this ratio to ensure it has enough ready money for urgent payments.
The current ratio compares short-term assets to short-term debts to show if a company can pay what it owes soon. A Pakistani trader uses this to check if its cash, stock, and receivables cover upcoming payments.
Debt management ratios show how much a company relies on borrowing compared to its assets or owners’ funds. For instance, a Pakistani trader checks these ratios to avoid taking on too much debt that might risk their business.
Debt to equity ratio compares the company’s borrowing to its owners’ investment to show financial risk. A Pakistani service business uses this ratio to decide if it should rely more on loans or owner’s funds to grow safely.
A Financial Ratio Calculator is used to assess the performance of a business by calculating ratios from its financial statements. These ratios help businesses and investors measure various aspects of financial health, such as profitability, solvency, and efficiency. The calculator can provide important insights into a company's overall financial condition.
The value of fixed assets at the end of the year reflects the company’s physical assets after adjusting for factors like depreciation or asset sales. It shows how much value is left in assets that have a long-term use in the business.
The value of fixed assets at the start of the year includes all physical, long-term resources owned by the business, such as property, machinery, vehicles, and equipment. These assets are used in operations and expected to last for many years.
Gross profit margin on sales measures the percentage of sales left after paying for the cost of making the product. A Pakistani manufacturer uses this ratio to check if it controls production costs well to keep profits higher.
Interest cover tells how easily a business can pay the interest on its debts from its earnings. A service company in Pakistan checks this ratio to be sure it can afford the interest on any loans it has taken.
Investment cost is the amount of money spent to purchase or invest in assets that contribute to the long-term growth or operational capacity of the business. This could include buying new equipment, expanding infrastructure, or investing in other business opportunities.
Liabilities payable after one year are financial obligations that the business must repay beyond the next 12 months. These often include long-term loans, bonds, or other debts that are not due in the immediate future.
Liabilities payable within one year refer to the debts or obligations that need to be settled within the next year. This could include things like accounts payable, short-term loans, or wages owed to employees.
Liquidity ratios measure a business’s ability to pay its short-term bills with short-term resources. For example, a Pakistani service business uses these ratios to ensure it can pay suppliers and workers on time.
Net profit margin on sales shows how much profit remains from sales after all expenses like taxes and interest are paid. A trader in Pakistan looks at this to understand how much money is truly earned after all bills are settled.
Profitability ratios show how well a company earns profit compared to its sales, assets, or owners' investment. For example, a Pakistani agriculture business uses these ratios to see if it’s making good profit from its farming operations.
The quick ratio measures the ability to pay short-term debts using only the most liquid assets, excluding inventory. A Pakistani manufacturer uses this ratio to see if it can pay bills without having to sell stock first.
Raw material inventory at the end of the year refers to the remaining stock of materials that have not yet been consumed in the production process. This value can be used to assess how much material is left for use in the next period.
Raw material inventory at the start of the year refers to the stock of materials a business has available at the beginning of the year for manufacturing or production purposes. These are materials that will be processed into finished goods.
Raw material inventory purchased during the year represents the total cost of materials acquired during the year to be used in production. This is important for managing inventory levels and ensuring the availability of materials for manufacturing.
Return on assets (ROA) measures how well a business uses its assets to make a profit. A Pakistani agriculture firm uses ROA to see if its tractors and equipment are helping generate enough income.
Return on equity (ROE) shows how well a company uses owners’ money to make a profit. A Pakistani manufacturer watches ROE to understand how efficiently the owners’ investment is turning into earnings.
Shareholder’s equity or owner’s contribution refers to the capital invested in the business by the owners or shareholders. It represents their ownership stake in the company, calculated as the difference between assets and liabilities.
This is the value of goods still available for sale or use at the end of the year. A trader’s closing inventory shows what is left unsold at year-end.
This is the value of finished goods or products ready for sale at the beginning of the year. A trader’s opening inventory includes goods available to sell.
This is the value of finished goods bought during the year for resale or production. A manufacturer buys additional products or parts throughout the year.
This refers to the category or classification of a business based on its industry, size, or operations. A trader SME, for instance, might be classified differently from an agriculture-based SME due to the nature of its business activities.
This is the value of physical assets owned at year-end after accounting for wear, sales, or new purchases. A service provider’s fixed assets may include office equipment adjusted for depreciation.
This is the total value of long-term physical assets owned at the beginning of the year, like buildings and machinery. A farmer’s fixed assets might include tractors and storage sheds.
The average tax rate shows what percentage of total income is paid as tax by dividing total tax owed by total income. A trader might have an average tax rate of 15%, meaning 15% of their yearly income goes to taxes.
Tax expense is the total amount of tax a business or person owes for a specific period based on their taxable income. A manufacturer calculates tax expense each year by applying the tax rate to their taxable income from product sales.
Tax for the year is the total tax amount due for income earned during that specific tax year. For example, a service provider pays tax for the year calculated on their earnings within that tax period.
The tax year is the 12-month period a government uses to assess and collect taxes, which may differ from the calendar year. An agriculture business reports its income and pays taxes based on the country’s defined tax year, which may start in July instead of January.
Taxable income is the part of your total income that the government uses to calculate tax after subtracting deductions and exemptions. For example, a trader deducts business expenses from sales revenue to find taxable income before paying taxes.
Capital cost financing means raising money, through loans or investments, to buy long-term assets like buildings or equipment. A farmer might use capital cost financing to buy a tractor that will be used for many years.
Debt is money borrowed that must be paid back with interest over time. A trader might borrow from a bank to buy inventory and repay the loan gradually with added interest.
Equity is the ownership value in a business, coming from money invested by the owners or shareholders. For example, the owners of an agricultural business hold equity that represents their share after all debts are paid.
Initial capital cost is the total upfront money needed to start a business, including buying assets and setup expenses. For example, a service provider’s initial capital cost includes office furniture and technology to launch operations.
Initial equity investment is the money owners or investors put into a business at the start to gain ownership and fund growth. For example, a manufacturer invests capital upfront to buy machines and set up production.
Initial working capital is the cash a business needs at startup to cover short-term expenses and daily operations. A manufacturer needs initial working capital to buy raw materials and pay workers before sales begin.
The percentage of financing used to buy long-term assets that comes from loans, showing how much of the total investment in fixed assets like machinery or buildings is funded by borrowed money to be repaid over time. For example, an agriculture business may take a long-term loan to cover 80% of the cost of irrigation equipment that will be used for many years.
This is the total cost of buying raw materials used to make products. For example, a bakery’s cost of flour, eggs, and sugar is part of this expense.
Working capital financing provides funds to cover short-term business needs and keep operations running smoothly. For instance, a service business may rely on working capital financing to pay monthly bills and staff salaries.
This is the percentage of total money used to run daily business operations that comes from short-term loans. It shows how much of the working capital—like paying staff or buying inventory—is being financed through borrowing that must be repaid soon. For example, a trader might use a revolving credit facility to cover 50% of their total working capital requirement, helping him keep inventory stocked and bills paid during busy seasons.
Cost per unit refers to the expense associated with producing or purchasing one unit of a good or raw material. This cost is crucial for determining pricing strategies, profitability, and managing production costs.
This is how much it costs to buy or produce a single unit of raw material. For example, an agriculture SME may calculate the cost of one kilogram of fertilizer to manage input costs.
Delivery cost per year covers all expenses related to shipping, transportation, and handling of goods delivered to customers. It includes the cost of fuel, shipping fees, packaging, and logistics services over the year.
Economic Order Quantity is the ideal amount of stock a business should order each time to minimize total inventory costs, including ordering and holding costs. For example, a manufacturer of plastic containers may calculate that ordering 2,000 units of raw material at a time is the most cost-effective balance between storage space and order frequency.
This is the forecasted number of units or amount of revenue a business plans to generate each month. A services SME offering home cleaning packages may estimate monthly bookings based on previous demand.
Expense per unit is how much it costs to make or buy one item or unit of material. A trader SME buying electronics in bulk might calculate this cost to set a profitable selling price.
This is the remaining stock a business has after selling and restocking during the month. A services SME selling office supplies may track this to prepare for next month's demand.
This is the quantity of inventory available on the first day of a month. A manufacturer may begin the month with 1,000 units of finished goods ready for sale.
This refers to how many times a business restocks its inventory over the course of a year. A manufacturing SME might place 12 monthly orders to ensure it has enough parts to meet production schedules.
This is the amount of new stock a business buys during a specific time period to replenish its inventory. For example, an agriculture SME might purchase fertilizer and seeds each month to keep operations running.
Inventory Turnover shows how many times a business sells and replaces its inventory during a specific period, usually a year. For example, if a manufacturer of cement pipes sells and restocks its raw materials 8 times in a year, its inventory turnover is 8.
Raw material at the end of the month represents the remaining inventory of raw materials after usage and purchases have been accounted for during the month. This figure helps assess inventory turnover and plan for the next month’s needs.
Raw material at the start of the month represents the inventory of raw materials that the business already has available for use at the beginning of the month. It is important for tracking stock levels and planning material usage.
Raw material orders per year is the frequency with which a business purchases raw materials to maintain production levels. It reflects the number of times the business needs to replenish its inventory to keep production running smoothly.
Raw material purchased is the quantity of raw materials acquired by the business during a given period. This purchase helps replenish stock and ensures that production can continue without interruptions.
Raw material usage per month refers to the quantity of raw materials a business consumes during a single month of operation. It helps in inventory management and planning for future raw material purchases.
Storage capacity refers to the total space available in a warehouse or storage facility for storing goods, raw materials, or finished products. It is a key factor in determining inventory management and supply chain efficiency.
Storage cost per year includes all expenses associated with storing goods or materials, such as warehouse rent, utilities, insurance, and maintenance. This cost is a fixed or recurring expense that helps maintain inventory and storage systems.
The type of SME or business refers to the specific category or industry in which the business operates. It can be categorized by the nature of products or services provided, the size of the business (e.g., number of employees or revenue), or its specific market or sector.
Unit of measurement refers to the agreed standard used to track quantities in business operations. Common units of measurement include kilograms, liters, pieces, or meters, depending on the type of product or material.
The closing balance is the remaining loan amount after a payment has been made. A services SME might have a closing balance of PKR 75,000 after paying PKR 25,000 of a PKR 100,000 loan.
This is an important aspect of loan repayment, as it affects how quickly the borrower repays the loan. More frequent payments (e.g., monthly) typically result in lower individual payments but may increase the total interest paid over time.
Grace period in instalments means how many payments the borrower can skip at the beginning. For example, a trader may skip the first two payments of a loan while setting up their shop.
The grace period can give the borrower time to adjust to the loan before starting repayments. During this time, interest might still accrue, but no principal payments are expected.
An instalment is the amount paid regularly to repay a loan, including both part of the loan and interest. A service provider might pay PKR 20,000 each month as an instalment toward a business loan.
Interest is the extra money a borrower pays on top of the loan amount, based on a percentage rate. For example, a manufacturer might pay PKR 10,000 in interest each year on a PKR 100,000 loan.
The loan amount represents the principal amount that a borrower agrees to repay. It is crucial to know this figure when calculating repayment schedules and determining the total interest owed over the life of the loan.
A loan overview gives a summary of the loan's main details like amount, interest rate, and repayment schedule. This helps an agriculture SME clearly understand what they owe and when they must pay.
A loan schedule is a table showing when and how much the borrower has to pay each time. For a manufacturing SME, this helps plan monthly finances for loan repayments and operations.
The longer the loan tenure, the smaller the periodic payments, but this may result in paying more interest over the life of the loan. A shorter loan tenure usually means larger payments but less total interest paid.
The mark-up per year is a key factor in determining the total cost of the loan. It is applied annually and can significantly impact how much the borrower will need to repay over the loan’s term
The number of payments is the total instalments made over the full loan period. A service-based SME with a 2-year loan and monthly payments would make 24 payments in total.
The opening balance is the loan amount still unpaid at the start of a payment period. For example, if an agriculture SME borrowed PKR 300,000 and paid off PKR 50,000, the opening balance for the next cycle would be PKR 250,000.
Payments per year are the number of times repayments are made in a year. A manufacturer making monthly payments would have 12 instalments each year.
The periodic interest rate is the rate applied to the loan each time a payment is due, based on how often payments are made. If an agriculture SME has annual interest of 12% but pays monthly, the rate per period would be 1%.
The principal is the original amount borrowed, not including interest. A trader who borrows PKR 100,000 will slowly reduce this principal with each payment they make.
Total interest paid is the full amount of interest a borrower pays during the entire loan. For example, a trader may borrow PKR 200,000 and pay PKR 50,000 in interest over three years.
This is the combined total of the loan and all interest the borrower repays. A manufacturer borrowing PKR 500,000 might end up repaying PKR 650,000 in total, including all interest.
Tracking the amount paid helps determine how much is left to be collected from the customer. It ensures accurate record-keeping and is critical in managing outstanding receivables.
The balance due is calculated by subtracting the amount paid from the total invoice amount. It helps businesses monitor the outstanding debt that needs to be collected from customers.
Critical invoices are unpaid for more than three months and are at high risk of not being collected. An agriculture SME might treat these as urgent and consider stopping supply until payment is made.
Current means the invoice was issued recently and is still within its agreed payment period. A services SME might not worry yet about a bill that was just sent 10 days ago.
It is essential to track the customer’s name to identify which accounts are overdue and ensure follow-up for payment. Proper customer tracking helps in managing credit risk and improving cash flow.
The due date is set based on the payment terms agreed upon with the customer. It helps the business know when to expect payment and when the invoice will start being considered overdue if not paid.
This amount typically includes the cost of goods or services sold, any applicable taxes, and additional fees. It is important for tracking payments and ensuring the business receives the full amount owed.
The invoice date is important for determining the payment terms and calculating how long the customer has had to pay. It is the starting point for aging analysis and helps establish when payments are due.
Client-wise aging shows how long each individual customer has taken to pay. An agriculture SME might spot that one buyer regularly delays payment by over two months and needs follow-up.
This is a summary that groups unpaid invoices by how long they’ve been overdue. A manufacturer can use it to see if most payments are recent or if many are delayed beyond 90 days.
Seriously overdue means the invoice has not been paid for two to three months. A manufacturer would usually begin formal collection steps when an invoice reaches this stage.
Slightly overdue invoices are those that haven’t been paid within a month but are under two months late. A trader might start calling customers at this stage to remind them about their dues.
Accounts payable is money a business owes to others for goods or services received but not yet paid for. For example, a manufacturer might owe a supplier for machine parts delivered last month but not yet paid.
Accrued dividends are profits declared for shareholders but not yet paid out. A trading company that announces dividends in June but pays them in July lists these as accrued dividends.
These are liabilities that represent obligations for goods or services that have been received but are yet to be paid. Examples include wages, utilities, and interest expenses. Accrued expenses must be managed carefully to avoid cash flow problems.
Accrued income taxes are taxes the business owes on its earnings but hasn’t paid yet. For example, an agricultural company with profits in the first quarter must account for taxes even if payment is due later.
Accrued liabilities are unpaid but expected expenses like interest or taxes. A service firm might owe property taxes it hasn’t yet paid, which shows up as an accrued liability.
Accrued salaries are wages employees have earned but the business hasn’t paid yet. For example, a manufacturer that pays staff monthly may show unpaid salaries for the last week of the month as an accrued wage.
Accrued utilities are unpaid bills for services like electricity or water already used by the business. A farmer who has used irrigation-powered electricity in March but hasn't received the bill yet will show this as accrued utilities.
Accrued legal fees are legal bills that have been incurred but not yet paid. A services company resolving a contract dispute might list unpaid lawyer bills as accrued legal fees.
Businesses may pay taxes in advance to comply with tax regulations. These payments are recorded as assets until they are applied against future tax liabilities.
These are short-term bank loans that the business must repay within 12 months. A service provider might take such a loan to cover cash flow during slow months.
Bills or invoices payable are amounts a business owes for services or products it has already received. For example, a service business might have unpaid invoices from contractors who completed a renovation.
Cash is money kept available for immediate needs or unexpected expenses. A small shop owner in Peshawar might keep cash handy to manage emergencies or daily petty expenses.
This is the part of a long-term loan that is due for payment within the coming year. A manufacturer with a five-year loan must still pay one year’s worth of installments soon, which is shown here.
Dividends are usually paid quarterly or annually, and they represent a portion of the company’s profits. A business must ensure it has enough liquidity to pay dividends without affecting its working capital needs.
GST payable is the sales tax collected from customers that the business hasn’t yet submitted to the government. A services company that collected GST on its invoices must eventually pass this amount to the tax authorities.
Income tax is a liability that must be accounted for in the business’s financial statements. Efficient tax planning helps businesses optimize cash flow and working capital.
Interest payables are considered short-term liabilities and must be managed to ensure that the business can meet its financial obligations when they come due.
Lease liabilities are recorded as current or non-current liabilities, depending on the lease term. They affect cash flow and should be managed carefully, especially in businesses with long-term leasing agreements.
Notes payable are written promises to repay a loan within a short time, usually under a year. For example, an agriculture business might issue a note to buy a tractor, agreeing to pay within 10 months.
These are short-term liabilities that should be tracked to avoid any cash flow problems. Managing office supplies payables effectively can help the business maintain smooth operations.
Examples of prepaid expenses include insurance premiums, rent, or service contracts. These are considered current assets since the benefit will be realized within a year or during the next accounting period.
Raw material inventory includes the supplies bought in advance to make products. A trader in Multan stocking textiles for resale counts these fabrics as raw material inventory.
Raw material inventory includes the materials that are yet to be processed or manufactured into products, while finished goods inventory includes products that are ready for sale. These inventories are critical for maintaining smooth operations and ensuring that production or sales are not interrupted.
Rent payable is a liability that must be managed effectively. Delayed payments could harm relationships with landlords and affect the company’s creditworthiness.
Short-term borrowings can be used for financing day-to-day operations and working capital needs. They are typically more flexible but also carry higher interest rates compared to long-term loans.
Short-term investments provide a way for a business to earn returns on idle cash while maintaining liquidity. These investments are typically in low-risk assets like government bonds or money market funds.
These are quick loans taken to meet urgent financial needs and are repayable within one year. For instance, a trader may use a short-term credit line to restock fast-selling products.
Short-term debt includes loans and financial obligations that must be paid within one year. For instance, a trader who borrows money to buy seasonal inventory must repay the loan in a few months.
The complete sum of all investments made to establish a business, including land, equipment, and setup expenses.
This total reflects everything a manufacturer in Punjab spends to launch operations, from buying land to training staff.
Trade payables represent short-term liabilities and are a crucial part of working capital management. Managing trade payables effectively can help optimize cash flow and maintain good supplier relationships.
These are a key component of current assets, and their collection is essential for maintaining liquidity. Efficient management of trade receivables ensures that a business has the necessary cash flow to cover its obligations.
Upfront building rent refers to the advance payment made for a building before starting operations. An agriculture business leasing a warehouse in Faisalabad might pay several months’ rent upfront as part of this.
These are recurring short-term liabilities that businesses need to manage as part of their working capital. Efficient payment of utility bills ensures the business maintains essential services without disruption.
Working capital is the money required to cover the daily expenses of running a business. For example, a service provider in Lahore might use working capital to buy office supplies, pay salaries, or cover rent before earning revenue.
Small and Medium Enterprises Development Authority (SMEDA) is an autonomous institution of the Government of Pakistan under Ministry of Industries and Production. SMEDA was established in October 1998 for encouraging and facilitating the development and growth of small and medium enterprises in the country.
4th Floor, Building no.3, Aiwan-e-Iqbal Complex Egerton Road, Lahore - Pakistan
