Learn financial management from the ground up.

Double-entry bookkeeping

A method in which every transaction is recorded in two places, as a debit and a credit, so that the accounts always balance.

Supporting documents (bilag)

Documentation of a financial transaction, such as receipts and invoices, which serves as evidence for the entries in the accounts.

Reconciliation

A method of comparing the accounts against external sources, such as bank statements, to make sure the figures agree.

Notes to the accounts

Supplementary disclosures to the annual accounts that explain figures, values and methods, and make the accounts intelligible to outsiders.

Good accounting practice (god regnskapsskikk)

Recommendations and norms that supplement the Norwegian Accounting Act and Bookkeeping Act, and ensure the accounts give a true picture of the finances.

Financial accounts

The annual accounts, which give a complete overview of the company's financial events through the year.

IFRS (International Financial Reporting Standards)

An international framework for financial reporting that makes accounts comparable and transparent across national borders.

Profit and loss account

A financial statement showing a business's revenue, costs and result over a period.

Balance sheet

The statement showing assets, liabilities and equity at a given point in time, built on the equation assets = liabilities + equity.

Assets

Resources with economic value that a company owns or controls, divided into current assets and non-current assets.

Equity

The capital the owners have injected or the company has earned, calculated as assets less liabilities.

Non-current assets

Long-lived resources such as property, equipment and intangible assets, used in operations for more than one year.

Current assets

Resources such as cash, trade receivables and inventory that are expected to be converted into cash within one year.

Depreciation and amortisation

The accounting allocation of the cost of a long-lived asset across its useful life, on a straight-line or reducing-balance basis.

Impairment

A write-down of an asset's carrying amount to its fair value, following a lasting fall in value.

Carrying amount (book value)

The value of an asset or liability in the accounts: original cost less accumulated depreciation and impairment.

Residual value

The estimated value an asset is expected to retain at the end of its useful economic life.

Goodwill

The intangible value of a business over and above its physical assets, often made visible in an acquisition.

Acquisition cost

The total cost of acquiring an asset, including the purchase price and any necessary incidental costs.

Realisation

The process by which values or assets are converted into cash, typically through a sale.

Market value

The current value of an asset based on supply and demand in the market.

Gross profit

The difference between sales revenue and the cost of goods sold, before other operating costs are deducted.

Operating margin

The share of revenue left as profit after operating costs, expressed as a percentage.

Contribution margin

How much each unit sold contributes towards covering fixed costs, once variable costs are deducted.

ROS (return on sales / net profit margin)

The share of revenue that ends up as net profit, after all costs.

Profit after tax

The net result a business is left with once all tax has been deducted.

EBIT (operating profit)

Operating profit before interest and tax, a measure of profitability from the core business.

Break-even

The point at which revenue exactly covers all costs, leaving neither a profit nor a loss.

Sales per employee

Total revenue divided by the number of employees, a measure of the revenue generated per member of staff.

Mark-up (avanse)

The difference between the cost of goods and the selling price, showing the profit made on each sale.

ROE (return on equity)

Measures the return a business generates on the equity its shareholders have invested.

ROA (return on assets)

Shows how efficiently a business uses its total assets to generate profit.

ROCE (return on capital employed)

Measures the return on all capital in the company, both debt and equity.

ROI (return on investment)

Measures the profitability of an investment relative to what it cost.

WACC (weighted average cost of capital)

The weighted average cost of capital: the minimum return the company must deliver to its investors and lenders.

NPV (net present value)

Calculates the present value of future cash flows in order to judge whether an investment is worthwhile.

IRR (internal rate of return)

The rate at which the present value of an investment's future cash flows equals zero.

Discounting

A method for converting future amounts into today's value (or the other way round) using an interest rate.

Nominal interest rate

The stated annual rate on a loan before fees, as distinct from the effective rate.

Liquidity

How easily and quickly a company can turn assets into cash in order to meet its short-term obligations.

Current ratio (likviditetsgrad 1)

Measures current assets against current liabilities to assess the ability to meet short-term obligations.

Quick ratio (likviditetsgrad 2)

As the current ratio, but excluding inventory, giving a stricter measure of liquidity.

Cash ratio (likviditetsgrad 3)

Measures cash and cash equivalents alone against current liabilities, the strictest measure of liquidity.

Liquidity reserve

A financial buffer the company sets aside to meet unforeseen liquidity needs.

Cash flow

The movement of money into and out of a business over a given period.

Free cash flow

The cash left over after operating costs and capital expenditure, available for dividends, debt repayment or new investment.

Cash runway

How long a company can keep going on its existing cash balance before it runs out.

Burn rate

How quickly a company is using up its cash balance before it reaches positive cash flow.

10 tips for better liquidity

Ten practical steps for strengthening cash flow and avoiding liquidity problems in day-to-day operations.

Liabilities (debt)

A financial obligation a business owes to creditors or lenders, taking various forms.

Debt-to-equity ratio

A key figure showing the relationship between a business's debt and its equity.

Solvency

A key figure showing what proportion of the assets is financed by equity.

Equity ratio

The proportion of the company's assets financed by equity rather than by debt.

ICR (interest coverage ratio)

A key figure showing a business's ability to cover its interest costs out of operating profit.

DSCR (debt service coverage ratio)

A key figure showing how well operating income covers the period's debt service.

NIBD/EBITDA

A key figure showing roughly how many years a company would need in order to repay its interest-bearing debt.

Net interest-bearing debt (NIBD)

A company's interest-bearing debt, less cash and cash equivalents.

Interest costs

The costs a company pays to lenders or creditors for loans and debt.

Financial costs

All costs associated with raising capital and managing debt, not interest alone.

Overdraft facility (kassekreditt)

Flexible short-term credit that lets a business draw beyond the balance on its operating account, up to an agreed limit.

Capital

The financial resources a business uses for operations and growth, divided into equity, debt capital and working capital.

Physical capital

Physical capital such as machinery, buildings and tools, characterised by low liquidity.

Working capital

The difference between current assets and current liabilities, decisive for day-to-day operations.

Raising capital

The process by which companies seek external financing for growth, investment or restructuring.

Financing options

The methods a company can use to raise capital: equity, debt, venture capital and private equity, crowdfunding, and public support schemes.

Share issue

The process by which a company issues new shares in order to increase its equity.

CapEx (capital expenditure)

The funds a business spends on buying, upgrading and maintaining physical assets.

Costs

All the expenses a business incurs, divided into fixed, variable and financial costs.

Operating costs

Costs directly tied to day-to-day operations, decisive for budgeting and pricing.

Revenue

The money a business or individual receives from its activities over a given period.

Trade payables

The amount a business owes its suppliers for goods or services received on credit.

Trade receivables

Amounts customers owe a business for goods or services delivered on credit.

Inventory turnover

How many times a company sells and replaces its inventory over a period.

Value added tax (merverdiavgift)

A public consumption tax on goods and services, with rates from 0 to 25% in Norway.

Withholding tax on wages (forskuddstrekk)

Tax deducted from employees' wages before payment, made by the employer throughout the year, comparable to PAYE.

The a-melding (payroll report)

Norwegian employers' monthly reporting obligation to the Tax Administration (Skatteetaten) and the labour and welfare service (NAV), covering wages and employees.

The Shareholder Register and the shareholder return

The Norwegian Tax Administration's public register of shareholders, with an annual reporting obligation for limited companies.

Budgeting

The plan setting out a business's expected revenue and costs, in three main types: the operating budget, the investment budget and the cash budget.

Financial forecasts

Assumptions and estimates about future financial conditions, based on historical data and market analysis.

How your business can save money

Concrete savings tips for businesses, from small steps such as cutting energy use to larger measures such as reducing debt.