Working Capital
Definition
Current assets minus current liabilities. Measures a business's ability to pay short-term obligations. Positive working capital means the business can cover its near-term debts.
Related Terms in Business Terms
Break-Even Point
The level of sales at which total revenue equals total costs, so the business makes neither a profit nor a loss. Calculated as fixed costs ÷ (price per unit − variable cost per unit). Knowing your break-even point tells you the minimum you must sell to stay solvent. HelloBooks surfaces break-even analysis from your cost and pricing data.
Budget
A financial plan that estimates expected revenue and expenses over a future period, used to set targets and control spending. Comparing actual results to budget (variance analysis) reveals where a business is over- or under-performing. HelloBooks lets you build budgets per department or project and tracks budget-vs-actual automatically.
MRR (Monthly Recurring Revenue)
The predictable revenue a subscription business earns each month. Calculated by multiplying the number of paying customers by the average revenue per user (ARPU). Key SaaS metric.
ARR (Annual Recurring Revenue)
The annualized version of MRR (MRR x 12). Used by SaaS companies to measure predictable yearly revenue. A key metric for valuation and growth tracking.
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