Glossary

Robert Lauterborn’s (1990) buyer’s-side alternative to the 4Ps: consumer wants and needs, cost to satisfy, convenience to buy, and communication.

M02 · The marketing mix and customer value

Product, price, place and promotion: the four headings E. Jerome McCarthy (1960) used to organise the marketing mix.

M02 · The marketing mix and customer value

The 4Ps plus people, process and physical evidence, proposed by Booms and Bitner (1981) for marketing services.

M02 · The marketing mix and customer value

A range calculated from sample data by a method that captures the true value in 95% of samples; in Excel’s regression output, the Lower 95% and Upper 95% of each coefficient.

B03 · Descriptive statistics and regression in Excel

Segmentation in which the basis and the groups are chosen before the data are analysed, such as age bands, regions or heavy against light users.

M05 · Why segment?

An experiment in which units such as website visitors are randomly assigned to two versions, A and B, so that a difference in outcomes can be attributed to the version rather than to who saw it.

B01 · Collecting data: sources, samples and bias

A cell reference with a dollar sign before both its column and its row, such as $A$1, which stays the same when the formula is filled or copied.

B03 · Cells, references and formulas

The tendency for orders of equipment and other durable inputs to swing by a much larger percentage than the end demand they serve, because orders depend on the change in demand as well as its level.

M01 · How organisations buy

A record of all the increases and decreases in one item, such as cash or accounts payable, together with its balance.

F01 · Accounts, terminology and classifications

The difference between an account’s total debits and total credits, including any balance brought forward, stated on the side of the larger total.

F01 · Debits, credits and normal balances

A balance sheet layout with assets on the left and liabilities and equity on the right, like the two sides of an account.

F02 · The balance sheet and equity

An information system that identifies the economic events of an organisation, records them in money and communicates the results to the people who make decisions about it.

F00 · Finance, accounting and economics

The sequence of steps a business repeats every accounting period, from analysing transactions to preparing a post-closing trial balance.

F01 · The complete accounting cycle

Assets = liabilities + equity: the business’s resources equal the claims of creditors and owners on them.

F01 · The accounting equation

Revenue minus expenses as measured under the accounting rules; also called net income.

F00 · Finance, accounting and economics

Amounts a business owes suppliers for goods and services bought on credit. Called trade payables under IFRS.

F02 · Receivables and payables

Amounts customers owe a business for goods or services delivered on credit, usually due within 30 to 60 days and without interest. Called trade receivables under IFRS.

F02 · Receivables and payables

A timing difference in which revenue or an expense is recognised before the cash is received or paid. Meanwhile the amount is a receivable or a payable.

F01 · Accrual versus cash accounting

A way of keeping accounts that records revenue when it is earned and expenses when they are incurred, whenever the cash is received or paid. Financial statements under US GAAP and IFRS use it.

F01 · Accrual versus cash accounting

Net income minus cash from operating activities, divided by average total assets: the share of the asset base by which profit ran ahead of (positive) or behind (negative) operating cash.

F03 · Cash flow and earnings quality

An expense incurred in the period but not yet paid or recorded, such as wages or interest owed. It is recorded with a payable.

F01 · Adjusting entries

Interest that has built up since the last payment or crediting date but has not yet been paid or added to the balance.

F04 · Simple and compound interest

A liability for an expense incurred but not yet paid, such as wages, interest or utilities: the balance sheet side of an accrued expense.

F02 · Receivables and payables

Revenue earned in the period but not yet received or recorded, for example work done but not yet invoiced. It is recorded with a receivable.

F01 · Adjusting entries

All the depreciation recorded on an asset since it was acquired, held in a contra-asset account with a credit balance.

F01 · Adjusting entries

Whether values correctly describe the real-world thing or event they represent.

B01 · Data quality: is the data fit for the question?

The tendency to agree with statements, or to say yes, regardless of their content. It biases agree/disagree, true/false and yes/no questions.

M04 · Questionnaire design

A result agreed before research is carried out that will lead to a stated decision, such as “launch if at least 30% of target buyers say they would definitely buy”.

M04 · The research process

The features, quality level, design, brand name and packaging that deliver the core benefit.

M02 · Product decisions

An amount added to net income in the indirect method because it reduced net income without reducing cash in the period, such as depreciation or a loss on the sale of equipment.

F02 · The indirect method

The amount shareholders paid for shares above their par or stated value. Called share premium under IFRS and in the UK.

F02 · The balance sheet and equity

A mortgage whose interest rate is fixed for an initial period and then resets at intervals to an index plus a margin, within rate caps. Often shortened to ARM.

F04 · Mortgages

A label for an EBITDA-like measure with further adjustments beyond net income plus interest, taxes, depreciation and amortisation. Its definition is the company’s own, so it must be read with its reconciliation.

F02 · The multi-step income statement

R² adjusted for the number of coefficients, 1 − (1 − R²)(n − 1)/(n − p). It falls when a predictor adds too little, and can be negative.

B06 · Multiple regression

A measure of agreement between two groupings of the same observations, counted over pairs and corrected for chance: 1 for identical groupings, about 0 for chance agreement (Hubert and Arabie, 1985).

M05 · Cluster analysis

A list of every account and its balance after the adjusting entries have been posted, used to prepare the financial statements.

F01 · Adjusting entries

A journal entry made at the end of a period to bring an account up to date, so that revenue and expenses are recognised in the right period. It involves at least one income statement account and one balance sheet account, and never Cash.

F01 · Adjusting entries

Paid, non-personal communication from an identified sponsor through mass or digital media.

M02 · The promotion mix and integrated marketing communications

Setting the promotion budget at whatever the business has left after its other costs and profit target.

M02 · The promotion mix and integrated marketing communications

The total cost of an agency relationship: monitoring costs paid by principals, bonding costs paid by agents, and the residual loss that remains.

F00 · Governance and the agency problem

The conflict that arises when an agent’s interests differ from the principal’s and the principal cannot fully observe or control the agent’s actions.

F00 · Governance and the agency problem

In an agency relationship, the person who acts and makes decisions on behalf of a principal.

F00 · Governance and the agency problem

In revenue recognition, a business that arranges for another party to provide a good or service. It recognises revenue at the amount of its fee or commission.

F02 · Revenue recognition

An intermediary that arranges sales for a producer in return for a commission or fee without taking ownership of the goods.

M02 · Distribution channels and decisions

Collapsing groups of rows into one summary row per group by applying a function such as sum, mean or count. It moves a table to a coarser granularity.

B02 · Transforming and reshaping data

A schedule that groups receivables by how long they have been outstanding and applies a higher expected loss rate to older groups, used to estimate the allowance.

F02 · Receivables and payables

Akaike information criterion: a measure for comparing models fitted to the same data, −2 × log-likelihood + 2p; for least squares n ln(SSE/n) + 2p plus a constant. Lower is better.

B06 · Multicollinearity and model choice

A response-hierarchy model in which a buyer moves through attention, interest, desire and action. Usually credited to E. St. Elmo Lewis around 1898, though the attribution is disputed.

M02 · The promotion mix and integrated marketing communications

A contra-asset account holding the estimated amount of accounts receivable that will not be collected, deducted from Accounts Receivable on the balance sheet. Also called the allowance for credit losses.

F02 · Receivables and payables

Accounting for bad debts by estimating, at each period end, the receivables not expected to be collected, recording that estimate as an expense and an allowance, and later writing off specific accounts against the allowance.

F02 · Receivables and payables

The statement a hypothesis test looks for evidence for, contradicting the null hypothesis. It contains <, > or ≠ and is written H₁ (or Hₐ).

B04 · Hypothesis testing

A distress score developed by Edward Altman that weights several financial ratios (working capital, retained earnings, EBIT and equity, each relative to assets or liabilities, and in some versions sales) into one number, compared with zones that separate firms resembling those that failed from those that didn’t.

F03 · Distress scores

A date written so that its day and month could be swapped to give a different valid date, such as 04/03/2026 (4 March or 3 April).

B02 · Incorrect data types and inconsistent dates

The spreading of the cost of an intangible asset, such as purchased software or a customer contract, over the years it is used. The word is also used for the gradual repayment of a loan’s principal.

F00 · Value and valuation words

A table showing, for each payment on a loan, the interest, the principal repaid and the balance still owed.

F04 · Loan amortisation

A loan repaid by regular payments that each cover the interest due and repay part of the principal, so the balance falls to zero by the last payment.

F04 · Loan amortisation

A method for testing whether several group means are equal by comparing the variation between the group means with the variation within the groups; one-way ANOVA has one categorical factor. Abbreviated ANOVA.

B04 · One-way analysis of variance (ANOVA)

An Excel add-in, loaded from File > Options > Add-ins, that adds statistical tools (Descriptive Statistics, Histogram, Correlation, Regression and others) under Data > Data Analysis. Most tools, including Descriptive Statistics and Regression, write values rather than formulas, so their reports don’t update when the data change.

B03 · Descriptive statistics and regression in Excel

The scientific process of transforming data into insight for making better decisions (the definition INFORMS published in 2012).

B01 · The four kinds of analytics

The five steps of an analysis used in this course: question, data, analysis, decision and measure, repeated as each measured result raises the next question.

B01 · The four kinds of analytics

The tendency for an estimate of an uncertain value, such as what a price should be, to be pulled towards a number seen first, even an irrelevant one (Tversky and Kahneman, 1974).

M01 · What influences buying

The rate US banks disclose on deposit accounts under the Truth in Savings rules, reflecting the total interest paid on the account including compounding. An effective annual rate. Often shortened to APY.

F00 · Interest and inflation

The document a business issues after its financial year: the financial statements and their notes, and, for larger companies, management’s commentary and the auditor’s report.

F02 · Linking the statements

To scale a flow for a part-year period to a full year, by multiplying it by 12 and dividing by the number of months it covers. Balance sheet amounts are never annualised.

F03 · Horizontal analysis

A series of equal payments made at equal intervals for a fixed number of periods, such as loan instalments, rent or a regular savings deposit. Also the name of an insurance product that pays an income.

F04 · Annuities

An annuity whose payments are made at the start of each period, so the first payment is made now. Worth an ordinary annuity × (1 + r).

F04 · Annuities

The present value of $1 a period for n periods at rate r: [1 − (1 + r)^−n] ÷ r. Multiplied by the payment, it gives the present value of an ordinary annuity.

F04 · Annuities

In research, collecting no information that could identify the person who gave an answer, so that not even the researcher knows who it was.

M04 · The research process

Four small datasets published by Francis Anscombe in 1973 that share their means, variances, correlation and least-squares line but look completely different when plotted.

B05 · Scatterplots

The largest amount a person may commit their organisation to on their own authority; larger purchases need approval from someone more senior or a committee.

M01 · How organisations buy

The suppliers an organisation has vetted and allows its staff to buy from; a new supplier must usually be approved before it can be used.

M01 · How organisations buy

A lookup that, when no key equals the lookup value, returns the row of the largest key below it (or, in some modes, the smallest key above it); used with band tables sorted by their lower bounds.

B03 · Lookups: VLOOKUP, INDEX and MATCH, XLOOKUP

Annual percentage rate. In its simple sense, a periodic rate multiplied by the number of periods in a year, ignoring compounding; a US credit card’s APR is calculated this way. For closed-end US consumer loans, such as mortgages and car loans, the disclosed APR is broader and also reflects certain fees.

F00 · Interest and inflation

Buying and selling the same, or equivalent, cash flows at the same time for different prices, making a profit with no risk and none of one’s own money.

F00 · Six principles behind financial decisions

A value, reference, range or expression given to a function inside its parentheses, such as the range in SUM(J2:J232).

B03 · Functions, logic, text and dates

The links between the financial statements: net income flows into equity, ending equity into the balance sheet, and ending cash from the statement of cash flows into the balance sheet.

F01 · Financial statements from the adjusted trial balance

The price at which a dealer will sell a security; also called the offer.

F00 · Market participants

A resource the business controls as a result of past events and that is expected to bring it economic benefits. The FASB defines it as a present right of an entity to an economic benefit.

F01 · Accounts, terminology and classifications

The weakening of an observed correlation by random measurement error in either variable; Spearman’s correction divides the observed r by the square root of the product of the two reliabilities.

B05 · Curves, thresholds and restricted ranges

A person’s lasting evaluation of an object or idea, such as a brand, with the feelings and tendency to act that go with it.

M01 · What influences buying

Rules for dividing credit for a conversion among the marketing touchpoints that preceded it, such as last click, first click, linear or data-driven.

M02 · Measuring promotion and bringing the mix together

An independent examination of financial statements, after which the auditor gives an opinion on whether they are presented fairly, in all material respects, in accordance with the applicable financial reporting framework.

F01 · What accounting is and why businesses need it

The independent auditor’s opinion on whether the financial statements are presented fairly, in all material respects, under the applicable framework, with any going-concern paragraph and, for most public companies, critical audit matters.

F03 · Benchmarking and annual reports

The additional services and benefits offered with the actual product, such as guarantees, installation, support and loyalty schemes.

M02 · Product decisions

The maximum number of shares of a class that a corporation’s charter allows it to issue.

F02 · The balance sheet and equity

The correlation of a series with itself shifted by one or more periods; in regression, the tendency of residuals that are close in time to be alike.

B06 · Assumptions and diagnostics

The constant yearly inflation rate that would produce the same cumulative inflation over n years: (end index ÷ start index)^(1/n) − 1.

F04 · Inflation and real returns

Revenue divided by the number of orders in a period: the mean value of an order. Abbreviated AOV.

B01 · KPIs: measuring what matters

The rank given to each of a group of tied values: the mean of the positions the group occupies in the sorted list. Excel’s RANK.AVG.

B05 · Rank correlation

The expense for credit sales a business does not expect to collect. Also called credit loss expense or uncollectible accounts expense.

F02 · Receivables and payables

The statement of assets, liabilities and equity at a point in time. Called the statement of financial position under IFRS.

F01 · Financial statements from the adjusted trial balance

A ledger account laid out with date, explanation, reference, debit, credit and balance columns, showing the balance after every posting. Also called a running-balance or three-column account.

F01 · Posting to the general ledger

A set of measures proposed by Kaplan and Norton (1992) that adds customer, internal-process and innovation-and-learning perspectives to financial measures.

B01 · KPIs: measuring what matters

A large final payment that repays all or most of a loan’s principal at maturity, as on an interest-only loan.

F04 · Loan amortisation

A rush by many depositors to withdraw their money at once, which can bring down even a sound bank because its loans cannot be turned into cash quickly.

F00 · Market participants

The number of respondents a percentage or average is calculated on, such as all 516 completes or the 297 newsletter-only respondents. It is printed with the figure; a weighted figure is given with its unweighted base.

M04 · Analysing survey data

A large percentage change produced mainly by a small or unusual starting value rather than by a large change in the quantity itself.

B01 · Summarising data: changes, averages and spread

The date or period whose prices serve as the yardstick for real amounts; a price index is often set to 100 in it.

F04 · Inflation and real returns

How common a condition is in the population before any evidence is seen, such as the share of orders that are fraudulent; the prior probability in Bayes’ rule.

B04 · Probability

The value a result is compared with to judge whether anything changed, such as the previous period, the same period last year, a target, a comparison group or a forecast.

B01 · Business questions and measurable objectives

Net income less preferred dividends, divided by the weighted average number of common shares outstanding in the period.

F02 · The multi-step income statement

P(A | B) = P(A) P(B | A) ÷ [P(A) P(B | A) + P(A′) P(B | A′)]: how the probability of A changes once evidence B is seen.

B04 · Probability

Dividing a market by what people seek and do in the category: the benefits sought, usage rate, occasions, user and loyalty status, readiness stage or attitude towards the product.

M05 · Psychographic and behavioural segmentation

A standard against which a ratio or result is judged, such as the company’s own earlier years, a target or covenant, or the median of a peer group.

F03 · Benchmarking and annual reports

Comparing a business’s offer, prices or performance with competitors’ on the same measures, side by side, to find gaps and their implications.

M04 · Competitor research

Dividing buyers by the benefits they seek from a product, on the view that those benefits are the reasons segments exist; named by Russell Haley in 1968.

M05 · Psychographic and behavioural segmentation

A step-up procedure that controls the false discovery rate at q: sort the m p-values and reject every hypothesis up to the largest rank k whose p-value is at or below k × q ÷ m.

B05 · Correlation matrices

The variation of the group means around the grand mean, measured by the sum of squares between groups, Σ nᵢ(x̄ᵢ − x̄)².

B04 · One-way analysis of variance (ANOVA)

Bayesian (Schwarz) information criterion: −2 × log-likelihood + p ln n, which charges more per coefficient than AIC once n is 8 or more and so favours smaller models. Lower is better.

B06 · Multicollinearity and model choice

The price at which a dealer will buy a security.

F00 · Market participants

The ask minus the bid: the cost of buying and immediately selling, and the dealer’s gross reward for providing liquidity.

F00 · Market participants

Very large, fast-growing and varied collections of records, such as transactions, web logs and social media posts; OpenStax describes it by three Vs: volume, velocity and variety.

M04 · Secondary research

One of the intervals a numeric range is divided into for counting. Excel counts a value in a bin when it is above the bin’s lower edge and no more than its upper edge.

B03 · Descriptive statistics and regression in Excel

A constraint that holds exactly at the optimum, so that the resource it describes is used up; relaxing it could improve the objective.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

Replacing a numeric value with the interval (bin) it falls in. Bin edges can be equal-width, equal-frequency (quantiles) or set by a business rule.

B02 · Transforming and reshaping data

The distribution of the number of successes in n independent trials, each with the same probability p of success; its mean is np and its standard deviation √(np(1 − p)).

B04 · Discrete distributions

A chart that shows the rows of a data table as points and its columns as arrows on the same axes, such as brands and attributes on a perceptual map.

M05 · Perceptual maps

A pair of values that lies far from the pattern of the other pairs, whether or not either value is extreme on its own.

B05 · Outliers and influence

The group elected by a corporation’s shareholders to oversee management: hiring and paying the chief executive, approving strategy and dividends, and overseeing financial reporting.

F00 · Governance and the agency problem

A debt security that promises interest and repayment of the amount borrowed on stated dates; its holder is a lender to the issuer.

F00 · Financial markets

The market for debt securities issued by governments, companies and other bodies.

F00 · Financial markets

A way to control the family-wise error rate when making m comparisons: test each at α ÷ m, or multiply each p-value by m.

B04 · One-way analysis of variance (ANOVA)

An asset’s cost minus its accumulated depreciation; called the carrying amount under IFRS.

F01 · Adjusting entries

Shareholders’ equity as recorded in the balance sheet: total assets minus total liabilities, measured by the accounting rules.

F00 · Value and valuation words

Estimating a market, or a business’s sales, by building it from its parts: outlets × rate of sale × periods, or customers × the share who buy × how often × how much.

M04 · Market sizing

A chart of a distribution that draws the first and third quartiles as a box with the median inside it, whiskers for the spread beyond the box, a marker for the mean, and separate points for outliers. Also called a box plot.

B03 · Charts and conditional formatting

The power transformation (x^λ − 1) ÷ λ, or ln x when λ = 0, with λ estimated from strictly positive data to make them as close to normal as possible.

B02 · Skewed data and transformations

A name, term, sign, symbol or design, or a combination of them, that identifies a seller’s product and distinguishes it from competitors’.

M02 · Product decisions

The inflation rate at which an inflation-protected bond and an ordinary bond of the same term give the same return: (1 + nominal yield) ÷ (1 + real yield) − 1.

F04 · Inflation and real returns

The volume (or revenue) at which total contribution equals fixed costs, so profit is zero: fixed costs ÷ contribution margin per unit.

M02 · Pricing approaches

The ROAS at which a campaign’s contribution just covers its cost: 1 ÷ the contribution margin ratio.

M02 · Measuring promotion and bringing the mix together

A respondent who starts a questionnaire but stops before answering enough questions to count as a partial; AAPOR counts break-offs with refusals.

M04 · Survey error

A test of equal error variance: regress the squared residuals on the predictors and compare n × R² of that regression with a chi-square distribution on as many degrees of freedom as there are predictors.

B06 · Assumptions and diagnostics

A firm that arranges trades for clients as their agent, without owning the securities, and is paid a commission or fee.

F00 · Market participants

Selling two or more products together for one price, usually less than the sum of their separate prices. Pure bundling sells only the bundle; mixed bundling also sells the items separately.

M02 · Price, demand and pricing tactics

Analytics applied to the decisions of a business, such as what to sell, at what price, to whom, through which channel and with how much stock.

B01 · The four kinds of analytics

The stages of an organisational purchase: problem recognition, general need description, product specification, supplier search, proposal solicitation, supplier selection, order-routine specification and performance review.

M01 · How organisations buy

What a business as a whole aims to achieve, usually in money or size, such as more revenue, more profit or a larger market share.

M01 · Marketing objectives

The column or columns that identify one real-world thing in the business’s own terms, such as an order number or booking reference.

B02 · Duplicate records

The organisations that buy goods and services to produce other products, to run their operations or to resell: businesses, resellers, governments and institutions.

M01 · How organisations buy

Marketing to organisations that buy for their own operations or to resell. Abbreviated B2B.

M01 · What marketing is

Marketing to individuals and households who buy for their own use. Abbreviated B2C.

M01 · What marketing is

In a buying centre, the person with formal responsibility for dealing with suppliers and arranging the terms of the purchase.

M01 · How organisations buy

A short profile of a typical member of a target segment, written as if about one person but built from research data on the segment, used to keep the segment’s needs in view in decisions.

M05 · Targeting strategies

How far a person has moved towards buying a product: unaware, aware, informed, interested, desirous or intending to buy.

M05 · Psychographic and behavioural segmentation

All the people in an organisation who take part in a purchase decision, each in one or more roles; also called the decision-making unit.

M01 · How organisations buy

The five stages a consumer goes through in a considered purchase: need recognition, information search, evaluation of alternatives, purchase decision and post-purchase behaviour. Routine purchases skip stages.

M01 · How consumers make buying decisions

A column of an Excel table filled by one formula, which Excel copies to every row, including rows added later.

B03 · Excel tables and cleaning data

Sales a new offer takes from the same company’s existing offers, rather than from rivals or from people who would otherwise have bought nothing.

M05 · Targeting strategies

The share of a new offer’s sales that would otherwise have been sales of the company’s existing offers.

M05 · Targeting strategies

In finance, the money supplied to a business by investors, as debt or equity, to buy the assets it needs. The assets themselves (machines, buildings) are sometimes called physical capital.

F00 · Capital and liquidity

The process a firm uses to decide which long-term investments are worth making, by comparing what they cost with the value of what they are expected to return.

F00 · What finance is: money, time and risk

Cash spent on property, plant, equipment and similar long-lived assets (capex), reported in investing activities.

F03 · Cash flow and earnings quality

The market for long-term finance: debt maturing in more than a year, and shares.

F00 · Financial markets

The mix of debt and equity a business uses to finance its assets.

F00 · Capital and liquidity

To record a cost as an asset, because it will bring benefits beyond the current period, rather than as an expense of the period.

F02 · Long-lived assets

Converting text to a single case, usually lower case, so that values differing only in capitals compare as equal.

B02 · Text cleaning and consistent categories

A way of keeping accounts that records revenue when cash is received and expenses when cash is paid.

F01 · Accrual versus cash accounting

Inventory days plus receivables days minus payables days: the number of days between paying suppliers and collecting from customers that the business must finance itself.

F03 · Efficiency and working capital

Short-term, highly liquid investments that are readily convertible to known amounts of cash and so near maturity that changes in interest rates barely affect their value: generally those with a maturity of three months or less when acquired, such as Treasury bills and money market funds.

F02 · The statement of cash flows

Cash received or paid out by a person or business over a period, or expected to be received or paid as a result of a decision.

F00 · Finance, accounting and economics

Cash and short-term investments divided by current liabilities: what could be paid at once if nothing more came in.

F03 · Liquidity

A series of cash flows due at different dates. An even stream (equal amounts at equal intervals for a fixed number of periods) is an annuity; an uneven one is valued by discounting each cash flow separately.

F04 · Discounting cash flows

A line marked off in equal periods, with time 0 at the valuation date and each cash flow written at the date it occurs, used to set up time-value problems.

F04 · Present and future value

Converting the labels of a categorical variable into numbers that a model can use.

B02 · Encoding categorical variables

A variable whose values place each observation in a group, such as channel, product or a survey answer. It is nominal or ordinal.

B01 · Types of data

The axis of a column, bar or line chart that places text labels at equal spacing whatever they say, or dates in time order (a date axis); numbers placed on it are treated as labels.

B03 · Charts and conditional formatting

Merging the variants of a categorical value into the values of a controlled vocabulary, which changes the counts and statistics of each category.

B02 · Text cleaning and consistent categories

Research that tests whether changing one thing causes a change in another, by experiment: the change is made for a randomly chosen group and the outcome compared with a control group.

M04 · The research process

A relationship in which changing one quantity would change another.

B01 · Interpreting results: charts, comparisons and causes

A rectangle of cells written as its top-left and bottom-right cells joined by a colon, such as B2:D9; a whole column is written F:F.

B03 · Cells, references and formulas

The address of a cell, its column letter followed by its row number (such as F2), used in a formula to read that cell’s value.

B03 · Cells, references and formulas

Withholding a table cell based on too few people to report reliably or anonymously; a second cell is withheld when totals would otherwise reveal the first.

M04 · Insights and reporting

A study that observes every member of the population, rather than a sample.

B01 · Collecting data: sources, samples and bias

The result that the sampling distribution of the mean of n independent values gets closer to a normal distribution, with mean μ and standard deviation σ ÷ √n, as n grows, whatever the shape of the population (provided its standard deviation is finite).

B04 · Sampling distributions

Subtracting a fixed value, often the mean, from a variable before fitting, so that the intercept describes a typical case rather than x = 0. The slope is unchanged.

B06 · The least-squares line

In the United States, an accountant licensed by a state board of accountancy after passing a national exam and meeting the state’s requirements. Often shortened to CPA.

F00 · Finance, accounting and economics

Chief financial officer: the senior executive responsible for a company’s financial decisions, including investment, financing and working capital, and for its financial reporting.

F00 · Finance, accounting and economics

A revision of an estimate, such as an asset’s useful life or residual value, because of new information. It is applied from the period of the change onward, without restating earlier periods.

F02 · Long-lived assets

Disagreement between members of a marketing channel that gets in the way of the channel working. Vertical conflict is between levels; horizontal conflict is between members at the same level.

M02 · Distribution channels and decisions

One layer of intermediaries between the producer and the final customer. A direct channel has zero levels.

M02 · Distribution channels and decisions

The list of all the accounts a business uses, each with a name and usually a number, arranged by type.

F01 · Accounts, terminology and classifications

For any data set or distribution, at least 1 − 1/k² of the values lie within k standard deviations of the mean (k > 1): at least 75% within two and 88.9% within three.

B04 · Describing distributions

The distribution of the sum of the squares of k independent standard normal variables, k being its degrees of freedom. It is never negative and is skewed to the right, with mean k; chi-square tests use its right tail.

B04 · Proportions and chi-square tests

χ² = Σ(O − E)² ÷ E, the sum over categories or cells of the squared difference between the observed and expected counts divided by the expected count. It is 0 when every count matches its expectation.

B04 · Proportions and chi-square tests

The share of customers at the start of a period who have stopped buying by its end: 1 minus the retention rate.

M01 · Customer value, satisfaction and lifetime value

A formula that refers to its own cell, directly or through other formulas.

B03 · Cells, references and formulas

The share of cases a classification rule gets right: true positives plus true negatives over all cases. It should be compared with the base rate of the commoner outcome.

B06 · Logistic regression

A balance sheet that groups assets and liabilities into current and noncurrent categories.

F01 · Financial statements from the adjusted trial balance

The ordered record of every cleaning step: what was done, to which rows and columns, by what rule, and the row count afterwards.

B02 · Data quality reporting and a reproducible workflow

The share of revenue that comes from a business’s largest few clients; a high share means the loss of one client would hurt badly.

B03 · Dashboards that answer questions

A survey question that asks respondents to choose from a fixed list of answers.

M04 · Questionnaire design

Journal entries made at the end of an accounting period that transfer the balances of the revenue, expense and dividend accounts to Retained Earnings, leaving those accounts at zero.

F01 · Closing entries

A family of methods that sort observations into groups (clusters) whose members are more alike than members of different groups, judged by a chosen measure of distance. In marketing it forms segments from survey answers.

M05 · Cluster analysis

A sample drawn by dividing the population into groups (clusters), such as days or branches, choosing some clusters at random and including every member of each chosen cluster.

B04 · Sampling distributions

The list of themes, each with a definition and examples, used to code open survey answers into categories that can be counted.

M04 · Analysing survey data

The number the Unicode standard assigns to a character, written in the form U+00E9.

B02 · Text cleaning and consistent categories

The list of codes used in a qualitative analysis, each with a definition, rules for when to use it and when not, and an example.

M04 · Qualitative research

In qualitative analysis, labelling passages of transcripts with codes, short names for what each passage is about, so that passages on the same idea can be collected and compared.

M04 · Qualitative research

The standard deviation divided by the mean, usually as a percentage: spread relative to the size of the values. Meaningful only for ratio-scale variables with a positive mean.

B04 · Describing distributions

A one-to-one pretest in which a respondent works through a draft questionnaire and describes their thinking, aloud as they answer or afterwards, while the interviewer probes what each question meant to them.

M04 · Questionnaire design

The difference between two means divided by the pooled standard deviation, so that it is measured in standard deviations; 0.2, 0.5 and 0.8 are often called small, medium and large.

B04 · Comparing two means

A measure of agreement between two coders that corrects for agreement expected by chance: (observed agreement − chance agreement) ÷ (1 − chance agreement).

M04 · Qualitative research

A variable affected by two others. Holding it fixed, or selecting on it, creates an association between its causes even when they are unrelated.

B05 · Partial correlation

A conditional format that shades cells along a gradient of two or three colours between the lowest and highest values.

B03 · Charts and conditional formatting

A chart that combines two or more chart types, such as columns and a line, often with a secondary axis.

B03 · Charts and conditional formatting

A bank that takes deposits, makes loans and provides payment services to households and firms.

F00 · Market participants

The market for raw materials such as oil, metals and crops, traded for immediate delivery (spot) or through futures contracts.

F00 · Financial markets

The equity account that records what shareholders have paid the corporation in exchange for its common shares (share capital under IFRS). Some companies split this amount between the shares’ par value and additional paid-in capital, a detail later courses cover.

F01 · Accounts, terminology and classifications

A financial statement in which every line is shown as a percentage of a base figure (net revenue or total assets), so that businesses of different sizes, or one business in different years, can be compared.

F03 · Common-size statements

The share of a variable’s variance that the retained dimensions represent; on a two-dimensional map, the sum of its two squared loadings.

M05 · Perceptual maps

The quality of financial information that lets users identify similarities and differences between periods or between businesses; it is lost when the business, its accounting policies or the length of the period change.

F03 · Horizontal analysis

Financial statements that show the current period and one or more earlier periods in adjacent columns, with the same lines in the same order.

F03 · Horizontal analysis

The single date to which amounts due at different dates are moved, by compounding or discounting, before they are compared or added. Also called the focal date.

F04 · Present and future value

A group that did not get a change, used to estimate what would probably have happened to the affected group without it.

B01 · Interpreting results: charts, comparisons and causes

Two or more errors whose effects on the debit and credit totals cancel out, so the trial balance still balances.

F01 · The trial balance

Setting a price mainly from competitors’ prices: charging the going rate in markets for similar products, or bidding against expected rival bids in sealed-bid contracts.

M02 · Pricing approaches

Whatever lets a business attract customers or earn profits better than its rivals; in value terms, creating a wider gap than rivals between customers’ willingness to pay and the cost of serving them. It may be temporary or sustained.

M01 · Competitive advantage

The collection and analysis of information about competitors (their offers, prices, distribution, promotion, resources and plans) from the marketplace, by lawful and ethical means, for decisions.

M04 · Competitor research

Setting the promotion budget to match competitors’ spending, in dollars or relative to sales.

M02 · The promotion mix and integrated marketing communications

Identifying the firms and other options customers could choose instead, and studying their offers, prices, strengths, weaknesses and likely responses.

M01 · Situation analysis

Understanding what current and potential competitors can and are likely to do; one of Narver and Slater’s three components of market orientation.

M01 · Market orientation: putting customers at the centre

All the outcomes not in an event A, written A′; P(A′) = 1 − P(A).

B04 · Probability

The proportion of values present out of those that should be present.

B01 · Data quality: is the data fit for the question?

Buying with high involvement among brands that differ significantly: extensive search and careful evaluation.

M01 · How consumers make buying decisions

Depreciating separately each significant part of an asset that has a different useful life, such as a building’s structure, roof and lifts. Required by IAS 16; acceptable but not required under US GAAP.

F02 · Long-lived assets

A primary key made of two or more columns, such as order_id and line together in a line-item report.

B02 · Datasets: rows, columns, records and variables

The constant yearly rate that takes a starting value to an ending value over a number of years: (end ÷ start)^(1/years) − 1. Often shortened to CAGR.

F04 · Simple and compound interest

A journal entry with more than one debit, more than one credit, or both. Its debit total still equals its credit total.

F01 · Journal entries

The constant rate per period that takes a starting value to an ending value over n periods: (end ÷ start)^(1/n) − 1. Over years it is the compound annual growth rate.

B01 · Summarising data: changes, averages and spread

Interest calculated on the principal and on interest already added to the balance, so the balance grows by the same percentage each period.

F00 · Interest and inflation

Earning interest on interest already earned, because each period’s interest is added to the balance and earns interest in later periods.

F00 · What finance is: money, time and risk

How many times a year interest is calculated and added to the balance: annually, semi-annually, quarterly, monthly or daily.

F00 · Interest and inflation

Joining pieces of text into one, with the & operator or a function such as CONCAT or TEXTJOIN.

B03 · Functions, logic, text and dates

Targeting one segment or niche with one marketing mix, aiming for a large share of it; also called niche marketing.

M05 · Targeting strategies

A survey in which target customers read a short description of a proposed offer or positioning and rate its appeal, distinctiveness, believability and their intent to buy.

M05 · Positioning statements

A coherent set of concepts underlying accounting standards: the objective of financial reporting, the qualities that make information useful, and the definition, recognition and measurement of the elements of financial statements.

F01 · What accounting is and why businesses need it

Two observations ordered the same way on both variables: the one that is higher on x is also higher on y.

B05 · Rank correlation

A sum, count, average, maximum or minimum taken over only the rows of a table that meet one or more conditions.

B03 · Conditional sums, counts and averages

Formatting that a spreadsheet applies to a cell only while a rule about its value, or a formula, is true, and that updates when the values change.

B03 · Charts and conditional formatting

The probability of an event given that another has happened, P(A | B) = P(A and B) ÷ P(B).

B04 · Probability

A range calculated from sample data, estimate ± margin of error, by a method that captures the parameter in a stated share of samples (the confidence level). Any one interval either contains the parameter or doesn’t.

B04 · Confidence intervals

An interval for the average of y over all cases with a given x, ŷ₀ ± t* × s√(1/n + (x₀ − x̄)²/Sxx) in simple regression. It narrows towards zero width as the sample grows.

B06 · Prediction and intervals

The share of samples in which the method of building a confidence interval captures the parameter, such as 95%; equal to 1 − α.

B04 · Confidence intervals

In research, the promise that the researcher, who knows who gave each answer, will not reveal it or link it to the person in anything shared.

M04 · The research process

A third variable that affects both of two quantities being compared, making them move together, or apart, without either causing the other. Also called a confounder.

B01 · Interpreting results: charts, comparisons and causes

Under the UK GDPR, a freely given, specific, informed and unambiguous indication of a person’s wishes, by a statement or a clear affirmative action, agreeing to the use of their personal data. It can be withdrawn at any time.

B01 · Collecting data: sources, samples and bias

The options a buyer seriously considers when choosing, a subset of the options they know about; also called the evoked set.

M01 · How consumers make buying decisions

Whether the same thing is represented the same way wherever it appears, within a dataset and across datasets.

B01 · Data quality: is the data fit for the question?

A limit that every solution of an optimisation model must respect, written as a formula compared with a bound by ≤, = or ≥, such as hours used ≤ hours available.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

Evidence that a measure’s scores relate to other measures as they should: strongly to other measures of the same idea (convergent validity) and weakly to measures of different ideas (discriminant validity).

M04 · Questionnaire design

The person who uses an offering, who may or may not be the customer who chose and paid for it.

M01 · What marketing is

A sample of households or people who record what they buy over months or years, so that their purchases can be followed over time.

M04 · Secondary research

The best-known US price index, published by the Bureau of Labor Statistics: a measure of the average change over time in the prices urban consumers pay for a basket of goods and services. Often shortened to CPI.

F00 · Interest and inflation

The extent to which a measure’s items cover every part of the idea it is meant to measure, as defined; judged by comparing the items with the definition. Face validity, whether a measure looks right on the surface, is weaker evidence.

M04 · Questionnaire design

A table that counts observations by two categorical variables at once, one in the rows and one in the columns, with row and column totals.

B04 · Probability

Moving a whole-number cut-off by half a unit (to k + 0.5 or k − 0.5) when a continuous distribution, such as the normal, is used to approximate a discrete one, such as the binomial.

B04 · The normal distribution

The limit of compounding ever more often. A nominal rate compounded continuously grows an amount by the factor e^(rate × years), an effective annual rate of e^rate − 1.

F04 · Effective annual rates

A numerical variable that can take any value within a range, at least in principle, usually a measurement such as weight or time.

B01 · Types of data

An account paired with another account whose balance it reduces, such as Accumulated Depreciation—Equipment, which reduces Equipment. The two are reported together.

F01 · Accounts, terminology and classifications

An account with a normal debit balance that reduces revenue on the income statement, such as Sales Returns and Allowances or Sales Discounts.

F02 · Revenue recognition

A business’s right to payment for goods or services it has already transferred, when that right depends on something other than the passage of time, such as its own further performance. When only time stands in the way, the right is a receivable instead.

F02 · Revenue recognition

A business’s obligation to transfer goods or services to a customer from whom it has received payment, or from whom payment is due. In the ledger it is usually called unearned or deferred revenue.

F02 · Revenue recognition

A measure of the difference in brightness between two colours, (L₁ + 0.05) ÷ (L₂ + 0.05), where L₁ and L₂ are the relative luminances of the lighter and darker colour; it runs from 1:1 to 21:1.

B03 · Charts and conditional formatting

Equity supplied by owners in exchange for shares, recorded in Common Stock (share capital under IFRS).

F01 · The accounting equation

Price received minus variable cost per unit: what each unit contributes towards fixed costs and then profit. As a share of price it is the contribution margin ratio.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

In revenue recognition, the customer’s ability to direct the use of a good or service and obtain substantially all of its remaining benefits. Revenue is recognised when control transfers.

F02 · Revenue recognition

A general-ledger account whose balance must equal the total of a subsidiary ledger, such as Accounts Receivable for the customer accounts.

F01 · Posting to the general ledger

In an experiment, the group that receives the existing version or no change, against which the changed group is compared.

B01 · Collecting data: sources, samples and bias

The agreed list of allowed values for a column, usually set in the data dictionary or by an outside standard.

B02 · Text cleaning and consistent categories

The manager responsible for a company’s accounting, financial reporting and internal controls.

F00 · Finance, accounting and economics

A consumer product bought often and quickly, with little comparison, usually at a low price and from many outlets.

M02 · Product decisions

A sample made up of whoever is easiest to reach, such as the first replies to a link. It is not random and is often biased.

B01 · Collecting data: sources, samples and bias

The effort by the FASB and the IASB, formalised in the 2002 Norwalk Agreement, to remove differences between US GAAP and IFRS and to coordinate their future standards.

F02 · US GAAP and IFRS

The percentage of visits, or of ad clicks, that end in a chosen action such as an order or a sign-up. Which denominator is used varies between tools and reports, so always state it.

B01 · KPIs: measuring what matters

A measure of a row’s influence on a regression: how far all the fitted values move when the row is left out, scaled by the model’s precision. It is large only when a row has both a large residual and high leverage.

B06 · Transformations and influence

The underlying need a customer satisfies by buying a product; what the customer is really buying.

M02 · Product decisions

The branch of finance concerned with the decisions of businesses: which investments to make, how to pay for them and how to manage day-to-day cash. Also called business finance.

F00 · What finance is: money, time and risk

A journal entry that fixes an error in an entry already posted, by recording the difference between what was recorded and what should have been.

F01 · The complete accounting cycle

Describes two quantities that tend to move together, so that high values of one tend to go with high (or low) values of the other. Correlation alone does not show that one causes the other.

B01 · Interpreting results: charts, comparisons and causes

Pearson’s r: a number from −1 to +1 that measures how closely two numeric variables follow a straight line, positive when they rise together. Excel’s CORREL.

B03 · Descriptive statistics and regression in Excel

A square, symmetric table of the correlations between every pair of a set of variables, with 1s on the diagonal; m variables give m(m − 1)/2 distinct pairs.

B05 · Correlation matrices

A generic strategy of achieving the lowest cost of serving customers in an industry, so that the business can charge lower prices or earn higher margins than its rivals.

M01 · Competitive advantage

The return that the suppliers of a business’s capital expect, and so the return the business must be expected to earn to keep their money. For debt it is close to the interest rate; for equity it is the return shareholders could expect elsewhere for a similar risk.

F00 · Capital and liquidity

The cost of the inventory sold in a period, recognised as an expense in the period the related revenue is recognised. Often shortened to COGS.

F02 · Inventory and cost of goods sold

The direct cost of the goods and services sold in a period: cost of goods sold, plus cost of services for a business that sells services.

F02 · The multi-step income statement

The direct costs of providing services sold, such as the wages of staff who deliver them and the materials they use.

F02 · The multi-step income statement

Setting a price by adding a markup, a fixed percentage of the unit cost, to that cost.

M02 · Pricing approaches

The average product of two variables’ deviations from their means (dividing by n − 1 for a sample, by n for a population): positive when they tend to move together, negative when they move in opposite directions. Its units are the product of the two variables’ units.

B05 · Covariance and Pearson’s r

Promises written into a loan or bond agreement that restrict what the borrower may do or require it to meet conditions, such as a minimum current ratio or limits on dividends and further borrowing.

F00 · Governance and the agency problem

Error in a survey estimate that arises because the sampling frame misses part of the target population (undercoverage) or includes units outside it (overcoverage), and those units differ on what is measured.

M04 · Survey error

Cost per acquisition (or per action): spend ÷ conversions.

M02 · Measuring promotion and bringing the mix together

Cost per click: spend ÷ clicks.

M02 · Measuring promotion and bringing the mix together

Cost per thousand impressions: spend ÷ impressions × 1,000.

M02 · Measuring promotion and bringing the mix together

A measure of the strength of association in a contingency table, √(χ² ÷ (n × min(r − 1, c − 1))), from 0 for no association to 1 for complete association.

B04 · Proportions and chi-square tests

The right side of an account, or an amount entered there (abbreviated Cr). A credit increases liabilities, equity and revenue and decreases assets, expenses and dividends.

F01 · Debits, credits and normal balances

The conditions of a sale on credit: when payment is due and any discount for paying early. “n/30” means the full amount is due within 30 days; “2/10, n/30” offers 2% off for payment within 10 days.

F02 · Receivables and payables

The Cross-Industry Standard Process for Data Mining: a six-phase method for analytics projects (business understanding, data understanding, data preparation, modelling, evaluation and deployment), published as version 1.0 in 2000.

B01 · Problem-solving frameworks

The range of cells that a criterion is tested against, row by row, in functions such as SUMIFS and COUNTIFS.

B03 · Conditional sums, counts and averages

A condition used by a function such as SUMIFS or COUNTIFS to decide which rows to include, such as "web", ">=50" or ">="&K1; plural criteria.

B03 · Conditional sums, counts and averages

The extent to which a measure’s scores agree with a relevant outcome measured at the same time (concurrent validity) or later (predictive validity), such as stated purchase intent against later purchases.

M04 · Questionnaire design

A value of a test statistic’s distribution that cuts off a chosen tail area. A test rejects the null hypothesis when the statistic lies beyond it; a confidence interval uses it as its multiplier (1.96 for a 95% z interval).

B04 · Hypothesis testing

The smallest absolute value of a sample correlation that is statistically significant at a chosen level for a given number of pairs: t_crit ÷ √(n − 2 + t_crit²).

B05 · Testing a correlation

A measure of internal consistency: k ÷ (k − 1) × (1 − the sum of the k item variances ÷ the variance of the total score). It runs up to 1; values from about 0.70 to 0.90 are the usual target, and it assumes the items measure one thing (Cronbach, 1951).

M04 · Questionnaire design

A validation rule that tests a relationship between values in the same row, such as check-out falling after check-in.

B02 · Profiling a dataset and writing validation rules

Data on many units at one point or in one period of time, such as every respondent’s answers to one survey.

B01 · Types of data

A table counting respondents by their answers to two questions at once, usually shown with percentages calculated within each category of the explanatory variable. Also called a cross-tab.

M04 · Analysing survey data

Click-through rate: clicks ÷ impressions.

M02 · Measuring promotion and bringing the mix together

The values, ideas and attitudes that members of a group learn and share, which shape what they need, want and regard as normal.

M01 · What influences buying

The total percentage rise in prices over an interval of several periods: the end index level divided by the start level, minus 1.

F04 · Inflation and real returns

Cash, or an asset expected to be turned into cash, sold or used up within one year or the operating cycle, whichever is longer, such as receivables, inventory and prepayments.

F00 · Capital and liquidity

An obligation expected to be settled within one year or the operating cycle, whichever is longer, usually out of current assets, such as amounts owed to suppliers, wages, taxes and loan repayments due within the year.

F00 · Capital and liquidity

The part of a long-term loan’s principal that is due within one year (or the operating cycle) after the balance sheet date, shown as a current liability; the rest remains noncurrent.

F02 · The balance sheet and equity

Current assets divided by current liabilities: how many dollars of current assets a firm holds for each dollar it must pay within the year.

F00 · Capital and liquidity

The person or organisation that chooses and pays for an offering. The customer is not always the consumer who uses it.

M01 · What marketing is

Marketing and sales spending on winning new customers in a period, divided by the number of new customers won. Abbreviated CAC.

M01 · Customer value, satisfaction and lifetime value

The potential profit a business can earn from its current and potential customers.

M01 · What marketing is

The whole sequence of touchpoints and decisions a customer goes through, from first noticing a need to the experience after the purchase.

M01 · How consumers make buying decisions

The present value of the margins a customer is expected to bring in over the whole relationship. Abbreviated CLV.

M01 · Customer value, satisfaction and lifetime value

A customer’s tendency to keep buying from a business (behavioural loyalty) and to prefer and recommend it (attitudinal loyalty).

M01 · Customer value, satisfaction and lifetime value

Understanding target customers well enough to keep creating value for them; one of Narver and Slater’s three components of market orientation.

M01 · Market orientation: putting customers at the centre

The customer’s judgement, after buying, of how well an offer performed compared with what they expected.

M01 · Customer value, satisfaction and lifetime value

The customer’s judgement of the benefits of an offer relative to its total cost in money, time, effort and risk, compared with the alternatives.

M01 · Customer value, satisfaction and lifetime value

Describes an organisation built and measured around customers and their needs (for example by retention and lifetime value) rather than around its products.

M01 · Market orientation: putting customers at the centre

Depreciation and amortisation: the part of the cost of long-lived physical and intangible assets charged as an expense in the period.

F00 · Value and valuation words

A design that steers people into choices they would not make if they understood them, such as a pre-ticked add-on or a cancellation made deliberately hard.

M01 · What influences buying

A single screen or page showing a small set of KPIs, each with its current value, target, comparison and trend, for the people who act on them.

B01 · KPIs: measuring what matters

A conditional format that draws a bar inside each cell whose length, by default, is proportional to the cell’s value.

B03 · Charts and conditional formatting

A document recording, for each column of a dataset, its meaning, level of measurement, type, unit, allowed values, rule for blanks and business rules.

B02 · Datasets: rows, columns, records and variables

Using information when building a model that would not be available when the model makes real predictions, such as test-set values used to fit a preparation step. It makes performance estimates too optimistic.

B02 · Normalisation and standardisation

The stages data passes through, from planning and collection through preparation, storage and use to sharing and finally archiving or deletion.

B01 · Data quality: is the data fit for the question?

The traceable path from a figure or cleaned table back through every step to the raw data and the version of the steps that produced it.

B02 · Data quality reporting and a reproducible workflow

The data-protection principle that personal data should be adequate, relevant and limited to what is necessary for the purpose.

B02 · Data quality reporting and a reproducible workflow

The person accountable for a dataset: for deciding what it should contain and how it is defined, who may use it, and how its quality problems are resolved.

B01 · Data quality: is the data fit for the question?

Systematically describing what a dataset contains (types, blanks, distinct values, ranges, distributions and relationships between columns) before using or changing it.

B02 · Profiling a dataset and writing validation rules

One aspect of data quality that can be assessed and measured on its own, such as completeness or validity.

B01 · Data quality: is the data fit for the question?

A document that travels with a cleaned dataset and records its source, its problems, the decisions taken and why, their effect on the results, the remaining limitations and how to reproduce the cleaning.

B02 · Data quality reporting and a reproducible workflow

A set of related values plotted together in a chart, such as order value for each month. Each series has its own colour or marker and its own entry in the legend.

B03 · Charts and conditional formatting

An Excel what-if tool that recalculates a formula for a list of values of one input cell, or for every combination of values of two input cells, and shows the results as a grid.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

The kind of value a column holds (such as number, text, date and time, or boolean), which determines the operations that make sense on it.

B02 · Incorrect data types and inconsistent dates

An Excel feature that restricts what can be typed into cells (a list, a range of numbers or dates, a text length or a formula) and shows an input message or an error alert.

B03 · Excel tables and cleaning data

A collection of values organised so that each value describes one characteristic of one thing; usually a table of rows and columns.

B01 · Types of data

The date that decides which shareholders will receive a declared dividend: those on the register that day. No journal entry is made.

F02 · The balance sheet and equity

The rule a contract or market uses to turn days into a fraction of a year for interest, such as actual/365, actual/360 or 30/360. Conventions vary between countries, markets and products.

F04 · Simple and compound interest

Average inventory divided by cost of goods sold, times the days in the period: the average number of days stock is held before it is sold. Abbreviated DIO.

F03 · Efficiency and working capital

Average accounts payable divided by purchases on credit (or cost of goods sold when purchases are not known), times the days in the period: the average number of days the business takes to pay its suppliers. Abbreviated DPO.

F03 · Efficiency and working capital

Average net receivables divided by credit sales, times the days in the period: the average number of days customers take to pay. Abbreviated DSO.

F03 · Efficiency and working capital

A firm that trades securities with clients from its own inventory, as a principal, and earns the difference between its buying and selling prices.

F00 · Market participants

The left side of an account, or an amount entered there (abbreviated Dr). A debit increases assets, expenses and dividends and decreases liabilities, equity and revenue.

F01 · Debits, credits and normal balances

Money borrowed under a contract that promises the lender interest and repayment of the principal on stated dates. Lenders do not own the business and are paid before shareholders.

F00 · Capital and liquidity

Total liabilities divided by total assets: the share of the assets financed by what the business owes rather than by its owners.

F03 · Solvency and leverage

Interest-bearing debt divided by the sum of interest-bearing debt and equity: the share of the long-term funding provided by lenders.

F03 · Solvency and leverage

Debt divided by shareholders’ equity, a measure of leverage. Some analysts use interest-bearing debt in the numerator, others total liabilities.

F00 · Capital and liquidity

In a buying centre, the person or group with the power to choose the supplier or approve the purchase.

M01 · How organisations buy

The choice a manager faces, stated as the actions being considered: what to do, not what to find out.

M04 · The research process

A quantity the decision maker controls and an optimisation model chooses, such as the number of events to accept; in Solver, a variable cell.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

A business question tied to a choice someone must make, stated so that different possible answers would lead to different actions.

B01 · Business questions and measurable objectives

The date a corporation’s board declares a dividend, when it becomes a liability and retained earnings are reduced.

F02 · The balance sheet and equity

The stage in which sales and profits fall, and the firm decides whether to keep, harvest or drop the product.

M02 · The product life cycle

Identifying a research participant by combining pieces of information that don’t identify anyone on their own, such as a role, a location and an age group.

M04 · Insights and reporting

Finding records that describe the same thing and reducing each group to a single record, or merging them, according to stated rules.

B02 · Duplicate records

Failure to make a promised interest or principal payment on time, which gives the lender the right to take legal action to recover what it is owed.

F00 · Capital and liquidity

The tendency for people to stay with whichever option is pre-selected for them, so that the choice of default changes what most people end up with.

M01 · What influences buying

A timing difference in which cash is received or paid before the revenue or expense is recognised. Meanwhile the amount is a liability (unearned revenue) or an asset (prepaid expense).

F01 · Accrual versus cash accounting

An annuity whose first payment comes later than one period from now. Valued with the annuity formula one period before the first payment, then discounted to today.

F04 · Annuities

A name given to a cell, range or value, such as Rise for the cell holding a price rise, that formulas can use instead of the reference.

B03 · Cells, references and formulas

A sustained fall in the general level of prices: negative inflation.

F04 · Inflation and real returns

The number of values in a calculation that are free to vary. For a sample variance it is n − 1, because the deviations from the sample mean must add to 0.

B04 · Describing distributions

A want backed by the ability and the willingness to pay for it. Demand is always demand at a particular price.

M01 · What marketing is

The quantity of a product customers would buy at each price over a period, with everything else held constant. A price change moves along it; other changes shift it.

M02 · Price, demand and pricing tactics

Dividing a market by characteristics of people such as age, life stage and household, gender, income, occupation, education and ethnicity.

M05 · Demographic and geographic segmentation

A tree diagram of a hierarchical clustering, in which branches join at the height of each merge; cutting it at a height gives that many clusters.

M05 · Cluster analysis

Cost minus residual value: the total depreciation to be recognised over an asset’s useful life.

F02 · Long-lived assets

The systematic allocation of the cost of a long-lived asset, less its residual value, over its useful life. It is an expense in the accounts but uses no cash in the period it is recorded, and it is not a measure of market value.

F00 · Finance, accounting and economics

A one-to-one research conversation, often 30 to 90 minutes long, in which the interviewer follows a guide but is free to follow the participant’s answers.

M04 · Qualitative research

The market for contracts (forwards, futures, options, swaps) whose value depends on the price of something else, such as a share, a rate, a currency or a commodity.

F00 · Financial markets

Demand for a product that arises from the demand for what it helps to produce, and ultimately from the demand of consumers.

M01 · How organisations buy

A new variable calculated from other variables of the same row, such as expected total = quantity × unit price − discount, or nights = check-out date − check-in date.

B02 · Transforming and reshaping data

Analytics that answers “what happened?” by summarising past data into counts, totals, averages, rates, comparisons and charts.

B01 · The four kinds of analytics

Research that measures the characteristics of a population or market, such as how many, how often, who and how much, usually with a survey of a planned sample or with records.

M04 · The research process

A variable used to describe and reach a segment once it has been found, such as age, region, income or where people buy, as opposed to the segmentation base used to form it.

M05 · Why segment?

The variance of an estimate under a survey’s design divided by its variance under a simple random sample of the same size. Above 1 the design is less precise than simple random sampling; below 1, more.

M04 · Sampling methods

The attributes customers use in making a purchase decision, and so the ones worth putting on a perceptual map.

M05 · Perceptual maps

How far a value lies above or below the mean of its variable: x − x̄, positive above the mean and negative below.

B05 · Covariance and Pearson’s r

Analytics that answers “why did it happen?” by breaking results into parts, comparing groups and periods, and testing possible explanations.

B01 · The four kinds of analytics

A closed question with exactly two possible answers, such as yes or no.

M04 · Questionnaire design

An estimate of an effect: the change in the affected group minus the change in a comparison group over the same period, assuming the two would otherwise have moved in parallel.

B01 · Interpreting results: charts, comparisons and causes

Targeting two or more segments with a separate offer or marketing mix for each; also called segmented or multi-segment marketing.

M05 · Targeting strategies

A generic strategy of being unique in ways customers value, so that they will pay a premium price.

M01 · Competitive advantage

Earnings per share recalculated as if options, convertible securities and similar instruments had been turned into common shares, when that would reduce it.

F02 · The multi-step income statement

Communication with targeted individuals that invites a direct response, through email, direct mail, websites, apps and targeted online ads.

M02 · The promotion mix and integrated marketing communications

A channel with no intermediaries: the producer sells to the final customer itself, for example through its own shops or website.

M02 · Distribution channels and decisions

Finance in which borrowers sell their own securities to savers, who then hold a claim on the borrower.

F00 · Financial markets

A way of presenting cash flows from operating activities that lists the major classes of operating receipts and payments, such as cash collected from customers and cash paid to suppliers and employees.

F02 · The statement of cash flows

Recording bad debt expense only when a specific customer’s account is found to be uncollectible. Not acceptable under US GAAP or IFRS unless the amounts are immaterial.

F02 · Receivables and payables

Two observations ordered in opposite ways on the two variables: the one that is higher on x is lower on y.

B05 · Rank correlation

The present value of $1 received after n periods at a rate r per period: 1 ÷ (1 + r)ⁿ. Multiplying an amount by it gives the amount’s present value.

F04 · Present and future value

Fees paid to a lender at closing in exchange for a lower interest rate; one point costs 1% of the loan amount. Often called points.

F04 · Mortgages

The rate used to discount future amounts: the return available elsewhere on an investment of similar risk. Riskier amounts are discounted at higher rates.

F00 · What finance is: money, time and risk

Converting an amount to be received in the future into its value today by dividing by (1 + r) for each period of waiting.

F00 · What finance is: money, time and risk

A numerical variable that takes separate values with gaps between them, usually a count, such as packs ordered.

B01 · Types of data

The moderator’s or interviewer’s plan for a qualitative session: the topics in order, the main questions, any tasks and the time for each.

M04 · Qualitative research

Sampling some strata at higher rates than others, usually to read small groups separately; estimates for the whole population must then weight the strata by their sizes.

M04 · Sampling methods

Buying with high involvement among brands that seem alike: a fairly quick choice, often followed by doubts the buyer then tries to reduce.

M01 · How consumers make buying decisions

The number of different values in a field, counting each value once however many records share it, such as the number of customers rather than orders.

B03 · PivotTables

A wholesaler that works closely with the producers it represents, usually holding their stock and selling and delivering it to stores. The terms are often used interchangeably.

M02 · Distribution channels and decisions

Spreading money across investments whose results do not move in lockstep, so that losses on some are partly offset by gains on others.

F00 · Six principles behind financial decisions

Distributions of profit to a corporation’s shareholders. They reduce equity but are not an expense.

F01 · The accounting equation

A current liability for dividends declared but not yet paid.

F02 · The balance sheet and equity

A pattern in which larger amounts of a possible cause go with steadily larger effects, considered evidence (though not proof) of a causal link.

B05 · Correlation and causation

Wording with two negatives (“not unreasonable”, “oppose not allowing”) that respondents must untangle before they can answer, which leads to mistakes.

M04 · Questionnaire design

A question that asks about two things at once, so that someone who feels differently about each can’t answer it accurately.

M04 · Questionnaire design

An accelerated depreciation method that charges twice the straight-line rate on the asset’s book value at the start of each year, never taking book value below the residual value.

F02 · Long-lived assets

The system of recording every transaction in at least two accounts with equal debits and credits, so that the accounting equation stays in balance.

F01 · Debits, credits and normal balances

The time an amount takes to double at a constant compound rate r per period: ln 2 ÷ ln(1 + r) periods.

F04 · Simple and compound interest

The part of a property’s price that the buyer pays from their own funds; the mortgage finances the rest.

F04 · Mortgages

An issue tree whose branches are linked by arithmetic, such as revenue = visits × conversion rate × average order value, so that a change at the top can be traced to the drivers below it.

B01 · Problem-solving frameworks

A cell limited by data validation to the values in a list, which the user picks from an arrow beside the cell; in a dashboard it lets the reader choose what the formulas show.

B03 · Dashboards that answer questions

The principle that every transaction affects at least two items in the accounting equation, so it stays in balance.

F01 · The accounting equation

A 0/1 column that marks whether a row belongs to one category. With dummy coding, a variable with k categories is represented by k − 1 dummy variables plus a reference category.

B02 · Encoding categorical variables

The perfect multicollinearity that arises when all k one-hot columns of a variable are used together with an intercept, so the coefficients can’t be uniquely estimated.

B02 · Encoding categorical variables

A row that describes the same real-world entity or event as another row in the same dataset.

B01 · Data quality: is the data fit for the question?

The decomposition of return on equity into net margin × asset turnover × equity multiplier (three steps), or tax burden × interest burden × EBIT margin × asset turnover × equity multiplier (five steps), to show how much of a return comes from profitability, efficiency and leverage.

F03 · DuPont analysis

The sum of squared differences between successive residuals divided by the sum of squared residuals, for rows in time order. It runs from 0 to 4; near 2 means no first-order autocorrelation, well below 2 means neighbouring residuals are alike.

B06 · Assumptions and diagnostics

A function, such as FILTER, SORT, SORTBY or UNIQUE, that returns several values which spill into the neighbouring cells; available in Excel for Microsoft 365, Excel 2021 and Excel 2024.

B03 · Excel tables and cleaning data

A reduction in an invoice for paying before a stated date, written for example 2/10, net 30: 2% off if paid within 10 days, otherwise the full amount within 30. Also called a cash discount.

F04 · Effective annual rates

Net income divided by the number of shares outstanding. Often shortened to EPS.

F00 · Value and valuation words

How far reported profit can be relied on as a guide to the cash a business generates and will go on generating: whether it has arrived as cash, whether it will recur and how much it depends on management’s estimates.

F03 · Cash flow and earnings quality

Earnings before interest and taxes: profit before paying lenders and tax. For a company with no income or costs outside its operations, EBIT equals operating profit; otherwise the two differ.

F00 · Value and valuation words

Earnings before interest, taxes, depreciation and amortisation: EBIT plus D&A. A widely used but non-GAAP measure of operating earnings.

F00 · Value and valuation words

EBITDA (earnings before interest, taxes, depreciation and amortisation) divided by net revenue. A non-GAAP measure, affected by how leases are accounted for.

F03 · Common-size statements

A correlation computed between group averages or rates, such as cafés’ monthly means or regions’ percentages, rather than between individual observations.

B05 · Groups and Simpson’s paradox

The error of assuming that a characteristic of a group or area, such as a neighbourhood’s geodemographic type or average income, holds for each individual in it.

B05 · Groups and Simpson’s paradox

The assumption that a business is separate from its owners and from other businesses, so its records contain only its own transactions and events.

F01 · What accounting is and why businesses need it

Accounting profit minus the opportunity costs that accounting does not record, such as the owner’s forgone salary and the return her money could have earned elsewhere.

F00 · Finance, accounting and economics

The study of how people, firms and societies make decisions in the face of scarcity.

F00 · Finance, accounting and economics

The smallest number of single-character insertions, deletions and substitutions needed to turn one string into another; also called Levenshtein distance.

B02 · Duplicate records

A measure of how large an effect is, as opposed to whether it is statistically significant: a difference in means in the problem’s units, or a standardised measure such as Cohen’s d.

B04 · Comparing two means

The interest rate that, compounded once a year, gives the same result as a quoted rate with more frequent compounding: (1 + r/m)^m − 1. Often shortened to EAR.

F00 · Interest and inflation

The size of a simple random sample that would give the same precision as a survey’s actual sample: the sample size divided by the design effect.

M04 · Sampling methods

Income tax expense divided by income before income tax.

F02 · The multi-step income statement

In principal components analysis, the variance a dimension carries. With standardised variables the eigenvalues add up to the number of variables, so each divided by that number is the dimension’s share of the variance.

M05 · Perceptual maps

Demand whose elasticity has a magnitude above 1: quantity changes by a larger percentage than price, so revenue moves in the opposite direction to price.

M02 · Price, demand and pricing tactics

The point on a plot of the within-cluster sum of squares against the number of clusters after which extra clusters reduce it only a little; one guide to the number of clusters.

M05 · Cluster analysis

Money a person keeps in liquid form to cover unexpected costs or a loss of income, usually measured in months of essential spending.

F00 · Capital and liquidity

For bell-shaped, symmetric data, about 68% of values lie within one standard deviation of the mean, about 95% within two and about 99.7% within three.

B04 · Describing distributions

A fund whose capital is invested so that its income pays for a purpose, such as a scholarship or a professorship, indefinitely.

F04 · Perpetuities and growth

Market capitalisation plus debt minus cash: the value of a company’s operating business, claimed jointly by its lenders and shareholders. Often shortened to EV.

F00 · Value and valuation words

An equation stating that two sets of payments are worth the same at a given rate, written by moving every payment to one comparison date. Used to reschedule debts and to solve for an unknown payment or date.

F04 · Present and future value

The owners’ residual claim on a business. In the accounts it is assets minus liabilities (book value); in finance it is money invested in exchange for ownership, paid after lenders and other creditors, with no promised payments and no limit on the upside.

F00 · Capital and liquidity

The market for shares (stock), which are ownership claims on companies. Also called the stock market.

F00 · Financial markets

Total assets divided by shareholders’ equity: the dollars of assets controlled for each dollar of equity. It equals 1 plus liabilities to equity.

F03 · Solvency and leverage

Rates quoted with different compounding frequencies that produce the same growth over a year, and so have the same effective annual rate.

F04 · Effective annual rates

An amount recorded on the correct side but in the wrong account of the same type, such as rent posted to utilities expense or an invoice posted to the wrong customer.

F01 · The trial balance

A transaction left out of the records entirely. Both sides are missing, so the trial balance still balances.

F01 · The trial balance

A wrong amount recorded in the journal and posted to both accounts, so debits still equal credits.

F01 · The trial balance

An amount recorded on the correct side but in the wrong type of account, such as a repair (an expense) debited to equipment (an asset).

F01 · The trial balance

A result such as #DIV/0!, #VALUE!, #NAME?, #REF!, #N/A or #NUM! that Excel shows when a formula can’t calculate, naming the kind of problem.

B03 · Cells, references and formulas

A contract term that changes a payment in line with a named price index, such as the CPI, so that the payment keeps its purchasing power.

F04 · Inflation and real returns

An account set up by a mortgage lender and funded from part of each monthly payment, from which property taxes and homeowners insurance are paid. Also called an impound account.

F04 · Mortgages

In business statistics, a single physical location at which business is conducted, such as one shop or one factory. A company may consist of one or many establishments.

M04 · Secondary research

An effect size for ANOVA: the sum of squares between groups divided by the total sum of squares, the share of the variation that lies between the groups.

B04 · One-way analysis of variance (ANOVA)

Research in which the researcher spends time in people’s own settings, observing and talking with them, to understand behaviour in its context.

M04 · Qualitative research

Enterprise value divided by EBITDA: a multiple that compares differently financed companies on the same footing.

F00 · Value and valuation words

A set of outcomes of an experiment, such as “the order drawn is a subscription”.

B04 · Probability

A row whose values are identical to another row’s in every column.

B02 · Duplicate records

A lookup that returns a result only when it finds a key equal to the lookup value, and #N/A when it doesn’t.

B03 · Lookups: VLOOKUP, INDEX and MATCH, XLOOKUP

A range that Excel manages as one named object, with a header row, filter buttons and columns that formulas can refer to by name; it grows when rows or columns are added next to it.

B03 · Excel tables and cleaning data

An organised marketplace with published rules and standardised products, where buyers’ and sellers’ orders meet and prices are visible to all.

F00 · Financial markets

Obtaining something of value from someone by offering something in return. It needs at least two parties, each with something the other values, each able to communicate and deliver, and each free to accept or reject the offer.

M01 · What marketing is

A fund whose shares trade on a stock exchange throughout the day at market prices, which may differ slightly from its NAV (ETF).

F00 · Market participants

Allowing only one or a very few outlets in each area to sell a product.

M02 · Distribution channels and decisions

The opening page of a report, giving the answer and the recommendation first, with the main findings, their uncertainty and the main limitation.

M04 · Insights and reporting

A contract in which neither party has yet performed. It is not recorded in the accounts until one side acts, for example by paying or delivering.

F01 · The accounting equation

Assets = liabilities + common stock + beginning retained earnings + revenue − expenses − dividends.

F01 · The accounting equation

The gap between an offer’s perceived performance and the customer’s expectations. Performance above expectations is positive disconfirmation, below them negative disconfirmation, and equal to them confirmation.

M01 · Customer value, satisfaction and lifetime value

The number of observations a category or cell would be expected to hold if the null hypothesis were true: n × p for a goodness-of-fit test, row total × column total ÷ n for a test of independence.

B04 · Proportions and chi-square tests

An estimate of the amounts a business does not expect to collect on its receivables or loans, based on past experience, current conditions and reasonable and supportable forecasts. US GAAP’s CECL model (ASC 326) and IFRS 9 both measure allowances this way.

F02 · Receivables and payables

The probability-weighted average of the possible outcomes of an uncertain event: each outcome multiplied by its probability, then added.

F00 · What finance is: money, time and risk

The most that information removing all uncertainty could be worth to a decision: the expected value of choosing the best option once the outcome is known, minus the expected value of the best option chosen without that knowledge. Abbreviated EVPI.

M04 · The research process

Decreases in assets, or increases in liabilities, from using up resources in delivering goods or services. Expenses decrease equity; distributions to owners, such as dividends, are not expenses.

F01 · Accounts, terminology and classifications

Expenses are recognised in the period in which they are incurred, usually the period whose revenue they helped to earn. Often called the matching principle.

F01 · Accrual versus cash accounting

In a pair of variables, the one thought to help explain or predict the other; plotted on the x-axis. Also called the independent or predictor variable.

B05 · Scatterplots

Analysis that examines data with summaries and charts to see what patterns they contain before committing to a model or hypothesis.

B01 · Problem-solving frameworks

Research that aims to understand a problem, find possible explanations and generate hypotheses, usually with flexible, small-scale methods such as depth interviews, focus groups, observation and secondary data.

M04 · The research process

A continuous distribution of the time between events in a Poisson process with rate λ; its mean is 1/λ and P(T ≤ t) = 1 − e^(−λt).

B04 · Discrete distributions

Data that originates outside the organisation, such as official statistics, industry reports, competitors’ websites and reviews.

M04 · Secondary research

Using a fitted relationship to predict outside the range of the data it was fitted to, where there is no evidence that the relationship still holds.

B03 · Descriptive statistics and regression in Excel

The distribution of the ratio of two independent chi-square variables, each divided by its degrees of freedom. It has a numerator and a denominator df, is never negative and is skewed to the right.

B04 · One-way analysis of variance (ANOVA)

In one-way ANOVA, the ratio of the mean square between groups to the mean square within groups. It is near 1 when the null hypothesis of equal means is true and large when the means differ.

B04 · One-way analysis of variance (ANOVA)

A test of whether two population variances are equal, based on the ratio of the two sample variances; Excel’s F.TEST returns its two-tailed p-value. It is very sensitive to non-normal data.

B04 · Comparing two means

The amount a note or bond promises to repay at maturity, on which its interest is calculated; also called par value or principal.

F04 · Discounting cash flows

A burst of intense enthusiasm for a product that rises quickly and collapses quickly.

M02 · The product life cycle

The quality of information that depicts what it claims to depict: complete, neutral and free from error. One of the two fundamental qualitative characteristics.

F01 · What accounting is and why businesses need it

The expected proportion of false alarms among the hypotheses rejected (taken as 0 when none is rejected).

B05 · Correlation matrices

A case flagged by a screen or test that does not have the condition, such as a genuine order flagged as fraud. The false-positive rate is the share of cases without the condition that the screen flags, P(flag | no condition).

B04 · Probability

The probability of at least one false positive (Type I error) among a set of tests when every null hypothesis is true. It grows with the number of tests.

B04 · One-way analysis of variance (ANOVA)

The Financial Accounting Standards Board: the independent, private-sector, not-for-profit body, established in 1973, that sets US GAAP and is recognised by the SEC as the accounting standard setter for public companies.

F01 · What accounting is and why businesses need it

A style that is currently accepted or popular in a field; fashions typically rise slowly, stay popular for a while and decline slowly.

M02 · The product life cycle

The Federal Deposit Insurance Corporation: the independent US agency, established in 1933, that insures bank deposits and deals with failed banks.

F00 · Market participants

The set of all values of the decision variables that satisfy every constraint of an optimisation model.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

Converting numeric variables to comparable, unitless scales before they are used together in an analysis or model.

B02 · Normalisation and standardisation

The central bank of the United States, created in 1913, which conducts monetary policy, supervises banks and supports financial stability and the payments system.

F00 · Market participants

First in, first out: a cost formula that assigns the oldest costs to the units sold, leaving the most recent costs in ending inventory.

F02 · Inventory and cost of goods sold

The outcome code given to every case in a survey sample at the end of fieldwork, in AAPOR’s four groups: interview (complete or partial), eligible non-interview, unknown eligibility, and not eligible.

M04 · Survey error

The study of how people, businesses and governments raise, allocate and manage money over time, under uncertainty.

F00 · What finance is: money, time and risk

Under the US Truth in Lending rules (Regulation Z), the cost of consumer credit as a dollar amount, including interest and charges such as points and loan fees.

F04 · Loan amortisation

The branch of accounting that prepares general-purpose financial statements for outside users, such as investors and lenders, following accounting standards (US GAAP or IFRS).

F00 · Finance, accounting and economics

Claims whose value comes from the payments they promise or make possible, such as shares, bonds, deposits and loans, rather than from any physical use.

F00 · Financial markets

An institution, such as a bank, insurance company, pension fund or investment fund, that gathers money from savers and provides it to borrowers or invests it, changing the kind of claim along the way.

F00 · Financial markets

Any arrangement through which people with money to spare provide it to people who need it, in exchange for claims on future payments; also the place or system in which those claims are traded.

F00 · Financial markets

Structured reports of a business’s performance and cash flows for a period and its financial position at a date, prepared under accounting rules: the income statement, statement of changes in equity, balance sheet and statement of cash flows, together with their notes.

F00 · Finance, accounting and economics

The banks, markets and other institutions that move money from savers to borrowers and businesses, price time and risk, and help people share risk.

F00 · What finance is: money, time and risk

Cash flows with owners and lenders: issuing stock, borrowing, repaying loan principal and paying dividends.

F01 · Financial statements from the adjusted trial balance

A firm’s choice of how to pay for its investments: with owners’ money (equity), borrowed money (debt) or a mix, called its capital structure.

F00 · What finance is: money, time and risk

A fact a piece of research established, stated with its base and uncertainty, such as the share of respondents who chose an answer.

M04 · Insights and reporting

The factor √((N − n) ÷ (N − 1)) that reduces a standard error when a sample is drawn without replacement and is a large share of the population, usually applied above about 5%.

B04 · Sampling distributions

Characteristics of organisations used to segment business markets, such as industry, location, size, legal structure and performance: the business-market counterpart of demographics.

M05 · Why segment?

The exact link between a nominal rate, a real rate and inflation over the same period: (1 + nominal) = (1 + real) × (1 + inflation).

F04 · Inflation and real returns

z = atanh(r) = ½ ln((1 + r) ÷ (1 − r)), which turns a correlation into a quantity that is close to normally distributed with standard error 1 ÷ √(n − 3). Used for confidence intervals for ρ and for comparing correlations. Excel’s FISHER; FISHERINV reverses it.

B05 · Testing a correlation

Whether data is good enough for the use intended. The UK Government Data Quality Framework treats it as the definition of data quality: the same data can be fit for one purpose and unfit for another.

B01 · Data quality: is the data fit for the question?

The value of the response that a fitted line or model gives for a case’s values of the explanatory variables, written ŷ.

B06 · The least-squares line

A root-cause technique that asks “why?” of a problem and then of each answer in turn, usually about five times, until it reaches a cause that can be acted on.

B01 · Problem-solving frameworks

The minimum, first quartile, median, third quartile and maximum of a data set: the values a box plot draws.

B04 · Describing distributions

A cost whose total stays the same over a period whatever the volume, within the range of activity planned: rent, salaries, listing fees, a committed promotion budget.

M02 · Pricing approaches

A mortgage whose interest rate stays the same for the whole term, so the monthly payment of principal and interest never changes.

F04 · Mortgages

A generic strategy of serving one narrow segment better than broad competitors, through lower cost (cost focus) or differentiation (differentiation focus).

M01 · Competitive advantage

A discussion of a topic by a small group of people who meet a study’s requirements, led by a moderator who follows a discussion guide.

M04 · Qualitative research

An estimate, made in advance, of a future value such as next month’s orders. Because it is uncertain, it is best given with a range or as scenarios.

B01 · The four kinds of analytics

The actual value minus the forecast, once the actual is known. A positive error means the forecast was too low.

B01 · The four kinds of analytics

A company incorporated outside the United States that meets the SEC’s tests for foreign status (broadly, no more than half its voting shares held by US residents or, if more, management, assets and administration not mainly in the United States). Since 2007 the SEC has accepted its IFRS statements without reconciliation to US GAAP.

F02 · US GAAP and IFRS

The market in which currencies are exchanged for one another. It is almost entirely over the counter.

F00 · Financial markets

The annual report a US public company files with the SEC, with a fixed structure of items including the business description, risk factors, management’s discussion and analysis, and the audited financial statements and notes.

F03 · Benchmarking and annual reports

A validation rule that a text value follows a pattern, such as an email address containing exactly one @.

B02 · Profiling a dataset and writing validation rules

An entry in a spreadsheet cell that begins with an equals sign and calculates a result from values, references, operators and functions.

B03 · Cells, references and formulas

The category or goal an offer competes in, which tells customers what to compare it with and so decides its rivals.

M05 · Positioning statements

Cash from operating activities minus capital expenditure: the operating cash left for lenders and owners after paying for long-lived assets. A non-GAAP measure whose exact definition varies between companies.

F03 · Cash flow and earnings quality

The cost of transporting purchased goods to the buyer. It is part of the cost of inventory; freight-out, to customers, is a selling expense.

F02 · Inventory and cost of goods sold

The average number of times each person reached was exposed to the campaign: impressions ÷ reach.

M02 · Measuring promotion and bringing the mix together

Replacing each category with its share of the training rows.

B02 · Encoding categorical variables

A table of the answers to one question, giving the count and the percentage of the base for each answer.

M04 · Analysing survey data

The principle that the financial statements and their notes should include all the information a reader needs to understand them.

F01 · What accounting is and why businesses need it

A join that keeps every row of both tables, matched where possible.

B02 · Transforming and reshaping data

For an adjustable-rate mortgage, the index plus the margin: the rate the loan would reset to before any caps apply.

F04 · Mortgages

A named calculation built into a spreadsheet, such as SUM or IF, called in a formula with its arguments in parentheses.

B03 · Functions, logic, text and dates

Presenting expenses grouped by the activity they serve, such as cost of sales, selling, and general and administrative.

F02 · The multi-step income statement

What an amount invested today will be worth at a later date, at a given rate of return: FV = PV(1 + r)ⁿ.

F00 · What finance is: money, time and risk

Comparing values by how similar they are rather than whether they are exactly equal, to find records that probably refer to the same thing.

B02 · Duplicate records

Generally accepted accounting principles: the body of standards and conventions that businesses in a jurisdiction follow in financial reporting. US GAAP is set by the FASB.

F01 · What accounting is and why businesses need it

The amount by which the proceeds from selling a long-lived asset exceed its book value at the date of sale; a shortfall is a loss on disposal. Neither is revenue.

F02 · Long-lived assets

In a buying centre, a person who controls what information and which salespeople reach the others.

M01 · How organisations buy

The all-purpose journal, in which any kind of transaction can be recorded. Businesses that also keep special journals use it for entries that fit none of them, such as adjusting and closing entries.

F01 · Journal entries

The collection of all a business’s accounts, one for each account in the chart of accounts, showing every amount posted to each account and its balance.

F01 · Posting to the general ledger

A cohort of people born in the same span of years, such as those born in the 1980s; the boundaries of named generations vary between sources.

M05 · Demographic and geographic segmentation

Michael Porter’s broad ways of outperforming rivals: cost leadership, differentiation and focus, with focus pursued through either cost or differentiation.

M01 · Competitive advantage

Classifying small areas, such as postcodes, into types of neighbourhood using census and other data, and describing each type with survey data, on the principle that neighbours tend to resemble one another.

M05 · Demographic and geographic segmentation

Dividing a market by place: country, region, city, neighbourhood, climate or how urban an area is.

M05 · Demographic and geographic segmentation

The nth root of the product of n positive values, equal to the back-transformed mean of their logs; never larger than the arithmetic mean.

B02 · Skewed data and transformations

An Excel what-if tool that finds the value of one input cell that makes a formula cell equal a target value, by trying values in turn.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

The assumption that, unless there is evidence to the contrary, a business will continue operating for the foreseeable future.

F01 · What accounting is and why businesses need it

The short set of questions a typing tool uses to assign people to segments, chosen because they separate the segments best.

M05 · Profiling segments

The observation that a measure tends to stop tracking what it was meant to track once people are rewarded for moving it; often put as “when a measure becomes a target, it ceases to be a good measure”.

B01 · KPIs: measuring what matters

A chi-square test of whether the counts of one categorical variable follow a stated distribution, with k − 1 − m degrees of freedom for k categories and m parameters estimated from the data.

B04 · Proportions and chi-square tests

Beginning inventory plus purchases for the period: everything the business could have sold. It ends either in cost of goods sold or in ending inventory.

F02 · Inventory and cost of goods sold

The amount by which the price paid for a business exceeds the fair value of its identifiable assets less its liabilities. It is recognised only when a business is acquired.

F02 · Long-lived assets

The constant-growth dividend discount model: a share is worth next year’s dividend divided by (required return − growth rate), P₀ = D₁ ÷ (r − g).

F04 · Perpetuities and growth

The level of detail that one row of a table represents, such as one order, one customer or one region in one month.

B02 · Transforming and reshaping data

Making environmental claims about a product or business that are vague, exaggerated or unsupported by evidence.

M01 · Market orientation: putting customers at the centre

The range of a distress score between the distress and safe cut-offs, where the model misclassified firms in its samples and cannot call the outcome; Altman called it the zone of ignorance.

F03 · Distress scores

Gross profit as a percentage of net sales or net revenue; also called the gross profit margin.

F02 · Inventory and cost of goods sold

Net sales (or net revenue) minus cost of goods sold (or cost of sales). Called gross margin in some textbooks.

F02 · Inventory and cost of goods sold

A measure of the weight of a campaign: reach (as a percentage of the target audience) × average frequency, or impressions as a percentage of the audience. Abbreviated GRPs.

M02 · Measuring promotion and bringing the mix together

A stream of payments for a fixed number of periods in which each payment is a constant percentage larger than the one before.

F04 · Annuities

A stream of payments that continues for ever and grows at a constant rate g each period. Its present value is the next payment divided by (r − g), and it exists only when r > g.

F04 · Perpetuities and growth

The number (1 + r)ⁿ by which compound growth at a rate r per period multiplies an amount over n periods.

F04 · Simple and compound interest

The stage in which sales rise quickly, competitors enter and profits rise.

M02 · The product life cycle

A measure that must not get worse while a KPI is being improved, used to catch gains that come at a hidden cost.

B01 · KPIs: measuring what matters

Buying with low involvement among brands that seem alike: routine repurchase with little search or evaluation.

M01 · How consumers make buying decisions

A table or matrix drawn as a grid of coloured cells, the colour showing each cell’s value; for a correlation matrix, one colour for positive and another for negative correlations, paler near zero.

B05 · Correlation matrices

A private, unregistered investment fund, generally open only to wealthy or sophisticated investors, free to use leverage, short selling and derivatives.

F00 · Market participants

Using a financial contract, often a derivative, to reduce a risk one already faces.

F00 · Financial markets

Errors whose spread differs from row to row, typically growing with the fitted value; the opposite of homoskedasticity, a constant spread. It leaves least-squares slopes unbiased but makes the usual standard errors and prediction intervals wrong.

B06 · Assumptions and diagnostics

Any model that describes buying as a sequence of mental stages, such as awareness, knowledge, liking, preference, conviction and purchase.

M02 · The promotion mix and integrated marketing communications

A categorical variable with a very large number of distinct values, such as postcodes or product codes.

B02 · Encoding categorical variables

Replacing x with max(0, x − c), which is zero up to a threshold c and rises one for one above it, so that a correlation or a fitted line can follow a relationship that starts at the threshold.

B05 · Curves, thresholds and restricted ranges

The principle that assets are recorded at what they cost to acquire and get ready for use, and generally kept at that amount rather than updated to current value.

F01 · What accounting is and why businesses need it

A randomly chosen group deliberately not exposed to a campaign, used as the comparison for measuring its incremental effect.

M02 · Measuring promotion and bringing the mix together

A step-down procedure that controls the family-wise error rate: sort the m p-values, compare the k-th smallest with α ÷ (m − k + 1), and reject until the first that is not below its threshold. Never less powerful than Bonferroni.

B05 · Correlation matrices

Comparing the same line of the financial statements across two or more periods, as a dollar change and a percentage change on the earlier period. Also called trend analysis.

F03 · Horizontal analysis

A proposed explanation or prediction, stated precisely enough that data could show it to be wrong.

B01 · Business questions and measurable objectives

Analysis that starts from stated hypotheses and gathers the evidence that would confirm or contradict each, usually the most promising and cheapest first.

B01 · Problem-solving frameworks

The International Accounting Standards Board: the independent standard-setting body within the IFRS Foundation that develops IFRS Accounting Standards. It was set up in 2001.

F01 · What accounting is and why businesses need it

A conditional format that puts one of three to five icons in each cell according to the band of values, set by thresholds, that the cell falls in.

B03 · Charts and conditional formatting

The position on a perceptual map of the profile a customer or segment says it would most like; brands nearer it are closer to what that customer or segment wants.

M05 · Perceptual maps

A value whose job is to say which thing a row describes, such as an order number, customer number or postcode. It may be written with digits but is never an amount.

B01 · Types of data

International Financial Reporting Standards (formally IFRS Accounting Standards), written by the IASB. Each jurisdiction decides whether and for which companies to require them.

F01 · What accounting is and why businesses need it

A loss recognised when an asset’s carrying amount can no longer be recovered from its use or sale, measured under US GAAP against fair value and under IFRS against recoverable amount.

F02 · Long-lived assets

The interest rate at which the present value of a stream of payments equals the amount borrowed or the cash price: the rate a credit or instalment arrangement really charges.

F04 · Annuities

The number of times an ad is displayed. Repeat views by the same person count separately; a served impression is counted on delivery, a viewable one only if it could actually be seen.

M02 · Measuring promotion and bringing the mix together

Replacing a missing value with a substitute value, such as a mean, a group median, a category such as “Unknown” or a model’s prediction.

B02 · Missing values

Pay that depends on results, such as bonuses tied to targets, shares that vest over time and stock options, intended to align managers’ interests with owners’.

F00 · Governance and the agency problem

The statement of revenue, expenses and net income for a period. It measures performance on the accrual basis.

F01 · Financial statements from the adjusted trial balance

A temporary account used only during closing. Revenue and expenses are closed into it, so its balance equals net income or net loss; it is then closed to Retained Earnings. It never appears on a financial statement.

F01 · Closing entries

The income tax charged on a period’s income, whether or not it has been paid. Deducted from income before income tax to give net income.

F02 · The multi-step income statement

Income tax owed for a period but not yet paid at the balance sheet date: the tax for the period less estimated payments already made.

F02 · Receivables and payables

The difference between the cash flows with a decision and without it; the only cash flows that should influence the decision.

F00 · Six principles behind financial decisions

The change in a company’s total contribution caused by a decision: the new offer’s contribution minus the contribution it takes from existing offers and any extra fixed costs.

M05 · Targeting strategies

The part of an outcome, such as sales, that was caused by the marketing and would not have happened without it.

M02 · Measuring promotion and bringing the mix together

Describes events where knowing one has happened doesn’t change the probability of the other: P(A | B) = P(A), equivalently P(A and B) = P(A) × P(B). Two categorical variables are independent when this holds for every pair of their categories.

B04 · Probability

Two samples whose values are unrelated, such as separate groups of customers or calls, so that nothing links a value in one sample to a particular value in the other.

B04 · Comparing two means

A segment’s mean on a variable divided by the overall mean, times 100: 100 is average, above 100 the segment is higher than average. Often just called an index.

M05 · Profiling segments

A channel that uses one or more intermediaries between the producer and the final customer.

M02 · Distribution channels and decisions

Finance in which a financial intermediary takes savers’ money and provides it to borrowers; savers hold a claim on the intermediary, not on the borrower.

F00 · Financial markets

A way of presenting cash flows from operating activities that starts from net income (under IFRS from 2027, operating profit) and adjusts it for noncash items, gains and losses, and changes in operating current assets and liabilities.

F02 · The statement of cash flows

Adapting offers and marketing to a single customer, usually from data on what that customer has bought or said; also called one-to-one marketing.

M05 · Targeting strategies

Demand whose elasticity has a magnitude below 1: quantity changes by a smaller percentage than price, so revenue moves in the same direction as price.

M02 · Price, demand and pricing tactics

A sustained rise in the general level of prices, measured as the percentage change in a price index.

F00 · Finance, accounting and economics

In a buying centre, a person whose views or expertise shape the specification or the choice without making the final decision, such as an engineer or a specialist. Not to be confused with a social-media influencer.

M01 · How organisations buy

A data point whose removal would change a result, such as a correlation or a fitted line, noticeably. Influence measures how much a point matters, not whether it is correct.

B05 · Outliers and influence

The stage in which a buyer looks for information about ways to meet a need, from memory (internal search) or from personal, commercial, public and experiential sources (external search).

M01 · How consumers make buying decisions

In research, a participant’s voluntary agreement to take part, given after being told who is doing the research, what it involves and how their data will be used, with the right to withdraw at any time.

M04 · The research process

A company’s first sale of shares to the general public (IPO).

F00 · Financial markets

In a buying centre, the person who first suggests the purchase.

M01 · How organisations buy

A join that keeps only the rows whose key appears in both tables.

B02 · Transforming and reshaping data

An explanation of why a finding occurs, supported by more than one piece of evidence, that suggests an action the findings alone don’t.

M04 · Insights and reporting

Organisations that invest large pools of other people’s money, such as pension funds, insurance companies, mutual funds and hedge funds.

F00 · Market participants

An identifiable asset without physical substance, such as a patent, copyright, trademark, licence or software.

F02 · Long-lived assets

A constraint that a decision variable must take a whole-number value; int in Excel’s Solver.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

Planning and coordinating all promotion tools so that they deliver one clear, consistent message about the brand. Abbreviated IMC.

M02 · The promotion mix and integrated marketing communications

Placing a product in as many outlets as possible.

M02 · Distribution channels and decisions

The extent to which two or more people coding the same material independently assign the same codes, measured by percent agreement or Cohen’s kappa.

M04 · Qualitative research

Using the whole business, not just a marketing department, to create value for customers; one of Narver and Slater’s three components of market orientation.

M01 · Market orientation: putting customers at the centre

In a regression, a term that lets the effect of one predictor depend on the value of another, usually the product of the two columns. Its coefficient is the change in one predictor’s slope per unit of the other (for a dummy, the difference between the two groups’ slopes).

B06 · Categorical predictors and interactions

A chart of the mean of y for each combination of two factors, one line per level of one factor. Parallel lines suggest no interaction; diverging or crossing lines suggest one.

B06 · Categorical predictors and interactions

In a fitted line ŷ = b₀ + b₁x, the coefficient b₀: the fitted value when x is 0. It has a sensible meaning only when x = 0 is within or close to the data.

B06 · The least-squares line

The price of using someone else’s money: what a borrower pays a lender, usually stated as a percentage of the amount borrowed per year.

F00 · Capital and liquidity

Income before tax divided by EBIT: the share of operating profit left after interest expense (1.00 with no interest). A factor of the five-step DuPont decomposition; higher is better.

F03 · DuPont analysis

Earnings before interest and taxes divided by interest expense: how many times the period’s earnings cover its interest. Also called times interest earned.

F03 · Solvency and leverage

The price of using money for a period, stated as a percentage of the amount per year: received by savers and lenders, paid by borrowers.

F00 · What finance is: money, time and risk

A loan whose regular payments cover only the interest, so the principal is repaid in full at the end in one balloon payment.

F04 · Loan amortisation

The difference between the rate an intermediary charges borrowers and the rate it pays savers, in percentage points.

F00 · Financial markets

A business between the producer and the final customer that buys, sells, stores, moves or promotes the product.

M02 · Distribution channels and decisions

The extent to which the items of a multi-item scale move together, so that they can be treated as measuring one thing; usually summarised by Cronbach’s alpha.

M04 · Questionnaire design

The processes, carried out by an organisation’s board, managers and staff, that give reasonable assurance that its operations run well, its reporting is reliable and it complies with laws and regulations.

F01 · The complete accounting cycle

Secondary data that already exists inside the organisation, such as sales records, customer records and earlier research.

M04 · Secondary research

The discount rate at which the net present value of a set of cash flows is zero: the rate of return, per period, that an investment earns on its own cash flows (for a borrower, what the borrowing costs). For a loan or bond bought at a given price and held to maturity, it is the yield to maturity. Cash flows that change sign more than once can have several IRRs, or none. Often shortened to IRR.

F04 · Discounting cash flows

The third quartile minus the first quartile: the width of the middle half of the data (IQR).

B01 · Summarising data: changes, averages and spread

A numerical variable on which differences are meaningful but zero is an arbitrary point, so ratios are not, such as a calendar date or a temperature in °C.

B01 · Types of data

A measure, from 0 to 1, of how alike units in the same cluster are compared with units in different clusters; it drives the design effect of a cluster sample.

M04 · Sampling methods

The first stage of the life cycle after launch: low awareness, slow sales growth, high costs and usually losses.

M02 · The product life cycle

Goods held for sale in the ordinary course of business (and, for a manufacturer, materials and goods in production). An asset, measured at cost or, if lower, net realisable value.

F02 · Inventory and cost of goods sold

A reduction of inventory’s carrying amount to net realisable value, recognised as an expense. IFRS requires it to be reversed if value recovers, up to the original amount; US GAAP doesn’t allow a reversal.

F02 · Inventory and cost of goods sold

Cash flows from buying and selling long-term assets, such as equipment, and investments.

F01 · Financial statements from the adjusted trial balance

A firm that helps companies and governments raise money by underwriting new securities, advises on mergers and acquisitions, and often trades securities.

F00 · Market participants

A firm’s choice of which long-term assets and projects to put money into. The analysis behind it is capital budgeting.

F00 · What finance is: money, time and risk

The branch of finance concerned with the decisions of investors: which securities to buy, how to combine them and what they are worth. Also called investments.

F00 · What finance is: money, time and risk

How much a purchase matters to the buyer: its personal relevance, what is at stake and the buyer’s interest in the category. It depends on the buyer and the situation as well as the product.

M01 · How consumers make buying decisions

The international standard for representing dates and times, with units from largest to smallest; dates are usually written YYYY-MM-DD (its extended format) or YYYYMMDD (its basic format).

B02 · Incorrect data types and inconsistent dates

A diagram that breaks a problem or question into smaller questions, level by level, until each can be answered with specific evidence.

B01 · Problem-solving frameworks

The company, government or other body that creates a security and receives the money when it is first sold.

F00 · Financial markets

A respondent leaving particular questions unanswered while answering the rest of the survey.

M04 · Survey error

Adding a small random nudge to the plotted position of each point, less than half the step between recorded values either way, so that overlapping points become visible. Used for drawing only.

B05 · Scatterplots

Combining two tables by matching the values of a key column, so that each row gains the matching columns of the other table.

B02 · Transforming and reshaping data

The probability that two events both happen, P(A and B); in a contingency table, a cell count divided by the grand total.

B04 · Probability

A record of transactions in date order, each written as a complete entry with its debits, credits and explanation. Also called the book of original entry.

F01 · Journal entries

The record of one transaction in a journal: the date, the accounts and amounts debited and credited, and a short explanation.

F01 · Journal entries

Recording transactions in a journal.

F01 · Journal entries

A non-probability sample of units the researcher picks as typical or informative. Also called a purposive sample.

M04 · Sampling methods

A cluster analysis that sorts observations into k groups by repeatedly assigning each to the nearest group centre and moving each centre to the mean of its members, until no observation changes group; it makes the within-cluster sum of squares small.

M05 · Cluster analysis

A way of choosing k-means’ starting centres: the first at random, each further one with probability proportional to its squared distance from the nearest centre already chosen, so the starts spread out (Arthur and Vassilvitskii, 2007).

M05 · Cluster analysis

A rank correlation from −1 to +1: the number of concordant pairs minus the number of discordant pairs, divided by a denominator that allows for pairs tied on either variable. Written τ-b; without ties it equals Kendall’s original τ-a.

B05 · Rank correlation

A metric chosen to track progress towards a business objective, with an exact formula, a target, a direction (higher or lower is better) and an owner. Abbreviated KPI.

B01 · KPIs: measuring what matters

A measure of how heavy a distribution’s tails are. Excel’s KURT reports excess kurtosis, which is about 0 for normally distributed data and positive for heavier tails.

B03 · Descriptive statistics and regression in Excel

Giving each category an arbitrary integer code, often in alphabetical order. Misleading for nominal input variables in linear and distance-based models.

B02 · Encoding categorical variables

A measure of an outcome after it has happened, such as revenue for a month or profit for a year.

B01 · KPIs: measuring what matters

As an experiment is repeated more and more times, the relative frequency of an event tends to get closer to its probability, and the average of the results to the expected value.

B04 · Probability

The principle that identical goods or assets, producing identical cash flows, should sell for the same price, because otherwise traders could profit by buying the cheaper and selling the dearer.

F00 · Six principles behind financial decisions

A measure that moves before an outcome and, if the link holds, signals where that outcome is heading, such as visits or checkouts started before orders and revenue.

B01 · KPIs: measuring what matters

A question whose wording signals the answer the asker expects or wants, such as “Don’t you agree that…?”.

M04 · Questionnaire design

A zero at the start of a code, such as the first two digits of 004517. It carries no numerical value but is part of the identifier, and is lost if the code is stored as a number.

B02 · Incorrect data types and inconsistent dates

A lessee’s obligation to make the lease payments, measured at their present value at a discount rate such as the lessee’s incremental borrowing rate, and reduced as payments are made.

F03 · Solvency and leverage

The rule for fitting a line or model that chooses the coefficients making the sum of squared residuals as small as possible.

B06 · The least-squares line

The regression line that makes the sum of the squared residuals as small as possible; it passes through the point of means.

B03 · Descriptive statistics and regression in Excel

Recomputing a result once for each observation with that observation removed, to see how much each one changes the result.

B05 · Outliers and influence

A join that keeps every row of the left table, leaving the right table’s columns missing where there is no match.

B02 · Transforming and reshaping data

Having a long tail of small values; the mean is usually below the median. Also called negatively skewed.

B02 · Skewed data and transformations

Money a lender contributes to a borrower’s closing costs in exchange for a higher interest rate: the opposite of discount points.

F04 · Mortgages

The classification of a variable as nominal, ordinal, interval or ratio (Stevens, 1946), according to which comparisons between its values are meaningful.

B01 · Types of data

The use of debt to finance part of a business. Because interest is set by the loan contract and does not rise when the business does well, leverage magnifies shareholders’ gains and losses. Also called gearing.

F00 · Capital and liquidity

How far a row’s predictor values are from the centre of all the rows’, measured by its hat value hᵢ between 1/n and 1. High-leverage rows pull the fitted line towards themselves.

B06 · Transformations and influence

A present obligation of the business to transfer an economic resource to others, arising from past events.

F01 · Accounts, terminology and classifications

A person’s position in the course of life as shaped by household and family, such as living alone, living with a partner, raising children or retired; it often explains needs better than age alone.

M05 · Demographic and geographic segmentation

A person’s pattern of living, expressed in their activities, interests and opinions.

M01 · What influences buying

Last in, first out: a cost formula that assigns the newest costs to the units sold, leaving the oldest costs in ending inventory. Allowed under US GAAP, prohibited by IAS 2.

F02 · Inventory and cost of goods sold

The US tax rule (26 U.S.C. §472) that a taxpayer using LIFO for tax must not use another method to measure income in its reports to owners or for credit purposes.

F02 · Inventory and cost of goods sold

The probability a model with given parameter values assigns to the data actually observed. Maximum likelihood estimation chooses the values that make it largest.

B06 · Logistic regression

A statement answered on ordered points of agreement, usually five from “strongly disagree” to “strongly agree”.

M04 · Questionnaire design

A score built by averaging or summing several Likert items that measure one attitude, after reverse-coding any items worded in the opposite direction.

M04 · Questionnaire design

The four conditions behind regression’s t tests and intervals: a linear relationship, independent errors, normally distributed errors and equal error variance at every x.

B06 · Inference for coefficients

A new variant (flavour, size, format) added under an existing brand in a category where the brand already sells. Taking a brand into a new category is a brand extension.

M02 · Product decisions

An agreement under which a lender stands ready to lend up to a set limit, which the borrower draws on and repays as it needs; interest is charged only on the amount drawn.

F03 · Liquidity

An optimisation model whose objective and constraints are all sums of decision variables multiplied by constants, so that it can be solved exactly by the simplex method.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

A relationship whose points follow a straight-line band, so that each extra unit of x goes with roughly the same change in y.

B05 · Scatterplots

A change of a variable to a + b × x, such as a change of units; it shifts and rescales the values, keeping their order when b is positive and reversing it when b is negative, and leaves the shape of their relationships straight.

B05 · Covariance and Pearson’s r

For an asset, how quickly it can be turned into cash with little loss of value. For a firm or person, the ability to meet obligations as they fall due.

F00 · Capital and liquidity

Dropping every row that has a missing value in any variable an analysis uses; also called complete-case analysis.

B02 · Missing values

A question that contains an assumption, or emotive wording, that the respondent must accept in order to answer, such as “How excited are you to try…?”.

M04 · Questionnaire design

In principal components analysis of standardised variables, the correlations between each variable and each dimension; on a perceptual map they are drawn as arrows.

M05 · Perceptual maps

Adapting offers and marketing to the customers of a particular city, neighbourhood or store.

M05 · Targeting strategies

A solution that no small step can improve although a better solution exists elsewhere; k-means stops at one that depends on its starting centres.

M05 · Cluster analysis

The conventions of a language and region for writing numbers, dates, times and currency, such as the decimal mark, the thousands separator and the order of day and month.

B02 · Incorrect data types and inconsistent dates

An agreement by a company’s existing shareholders not to sell their shares for a period after an IPO, typically 180 days.

F00 · Market participants

Replacing each value x with ln x (or a log to another base); it needs positive values and turns equal ratios into equal differences.

B02 · Skewed data and transformations

The natural logarithm of the odds, ln(p ÷ (1 − p)), also called the logit. It is 0 when p = 0.5 and can take any value, which is why logistic regression models it as a linear function of the predictors.

B06 · Logistic regression

Replacing each value x with ln(1 + x), so that zeros become 0; its effect depends on the units of x.

B02 · Skewed data and transformations

The power to which a base must be raised to give a number: the base-10 logarithm of 1,000 is 3 because 10³ = 1,000. The natural logarithm, ln, uses the base e ≈ 2.71828.

F04 · Simple and compound interest

TRUE or FALSE: the result of a comparison such as J2>=50, and what IF, AND, OR and NOT work with.

B03 · Functions, logic, text and dates

Planning and controlling the physical flow of goods, including inventory, storage and transport, from the producer to the customer.

M02 · Distribution channels and decisions

A layout in which that variable has a column of its own and each combination of values has its own row.

B02 · Datasets: rows, columns, records and variables

A range holding the keys a lookup searches and the values it can return, such as a price list or a table of bands.

B03 · Lookups: VLOOKUP, INDEX and MATCH, XLOOKUP

The value a lookup formula searches for, such as the product named in an order row.

B03 · Lookups: VLOOKUP, INDEX and MATCH, XLOOKUP

The tendency for a loss to weigh more than a gain of the same size, both measured from a reference point (Kahneman and Tversky, 1979). It is different from risk aversion.

M01 · What influences buying

The rule that inventory is carried at the lower of its cost and its net realisable value; the reduction is an expense of the period.

F02 · Inventory and cost of goods sold

How consistently a buyer sticks to one brand or seller, from no loyalty (switching freely) to absolute loyalty.

M05 · Psychographic and behavioural segmentation

Methods in which a computer fits a model to data, learning a relationship between inputs and an outcome from examples rather than from rules written by a person. Supervised learning learns from examples with known outcomes; unsupervised learning looks for structure, such as groups, without them.

B01 · The four kinds of analytics

The part of economics that studies the economy as a whole: total output and growth, unemployment, inflation, interest rates and government and central bank policy.

F00 · Finance, accounting and economics

The wider political, economic, social, technological, environmental and legal forces that shape a whole market and that no single business controls.

M01 · Situation analysis

The coefficient of a predictor that also appears in an interaction: its effect when the other predictor in the interaction is zero or at its reference level.

B06 · Categorical predictors and interactions

Under IFRS 18, a subtotal of income and expenses that a company uses in public communications outside its financial statements to convey management’s view of its performance, and that IFRS does not itself specify. It must be explained and reconciled in a note.

F02 · US GAAP and IFRS

The section of an annual report (Item 7 of Form 10-K) in which management explains the results, liquidity, capital resources, known trends and uncertainties, and critical accounting estimates. Often shortened to MD&A.

F03 · Benchmarking and annual reports

The branch of accounting that prepares internal reports, such as budgets, cost reports and forecasts, to help managers plan, control and decide. It follows no externally imposed rules and often uses nonfinancial measures. Also called management accounting.

F00 · Finance, accounting and economics

A rank-based test for two independent samples, also called the Wilcoxon rank-sum test, that asks whether values in one group tend to be larger than in the other without assuming normality.

B04 · Comparing two means

A table that lists each variant of a value and the value it should become, kept as reviewed and versioned data rather than as one-off edits.

B02 · Text cleaning and consistent categories

Missing at random: whether a value is missing depends only on recorded variables; within groups defined by them it is unrelated to the missing value itself.

B02 · Missing values

Profit per unit as a percentage of price: (price − cost) ÷ price. Also called margin on price or, in some texts, markup on selling price.

M02 · Pricing approaches

The half-width of a confidence interval: the multiplier (z or t) times the standard error. It measures sampling error only, not bias.

B04 · Confidence intervals

The margin a segment’s whole spending would earn at a firm’s margin: customers × spend per head × margin. A ceiling for comparing segments, not a sales forecast.

M05 · Evaluating segments

The probability of one event regardless of the others; in a contingency table, a row or column total divided by the grand total.

B04 · Probability

The set of actual and potential buyers of an offering.

M01 · What marketing is

Share price multiplied by the number of shares outstanding: the market value of a company’s equity. Often shortened to market cap.

F00 · Value and valuation words

Information about customers’ current and future needs and the forces that shape them, including competitors, technology and regulation, gathered for decisions.

M01 · Market orientation: putting customers at the centre

A dealer that stands ready at all times to buy a security at its bid and sell it at its ask, providing liquidity.

F00 · Market participants

The combination of goods, services, information and experiences a business offers to satisfy a need or want.

M01 · What marketing is

The marketing concept put into practice: organisation-wide generation of intelligence about customers’ current and future needs, its dissemination across departments and responsiveness to it (Kohli and Jaworski, 1990); described by Narver and Slater (1990) as customer orientation, competitor orientation and inter-functional coordination.

M01 · Market orientation: putting customers at the centre

A group of buyers within a market who have similar needs or would respond similarly to a marketing offer, and who differ in those respects from other groups.

M05 · Why segment?

Dividing a market into segments of buyers with similar needs or responses, using one or more segmentation bases.

M05 · Why segment?

A business’s sales as a percentage of total sales in a defined market over the same period, measured in money or in units.

M01 · Situation analysis

The quantity of a product bought by a defined group of customers in a defined place over a defined period, measured in units (volume) or money (value).

M04 · Market sizing

What buyers and sellers are paying for something now. For a listed company’s equity it is the market capitalisation.

F00 · Value and valuation words

Market capitalisation divided by the book value of equity (or price per share divided by book value per share). Also called price-to-book.

F00 · Value and valuation words

The activity of creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society (a paraphrase of the American Marketing Association’s definition).

M01 · What marketing is

The set of organisations that work together to make a product available to the people who use it; also called a distribution channel.

M02 · Distribution channels and decisions

The belief that a business reaches its goals by finding out what target customers need and want and satisfying them better than competitors do.

M01 · Market orientation: putting customers at the centre

The actors and forces outside the marketing function that affect its ability to build and keep relationships with customers; divided into the microenvironment and the macroenvironment.

M01 · Situation analysis

A model of the stages customers pass through, from awareness through consideration and conversion to retention and advocacy, with fewer people at each stage.

M01 · Marketing objectives

The means by which a business collects, analyses and reports marketing information from its internal and external data, so that it is ready for decisions.

M04 · Secondary research

The set of controllable decisions a business combines to create, communicate, deliver and capture value for its target market.

M02 · The marketing mix and customer value

Defining a business by the product it makes rather than the customer need it serves, which hides substitutes and changes in what customers want (Theodore Levitt, 1960).

M01 · What marketing is

A statement of what customers must do, how much and by when, for a business goal to be met, such as the number of customers to win or keep, with a measure, a level and a date.

M01 · Marketing objectives

The five steps of marketing work used in this course: understand customers and the market, design a customer-driven strategy, build the offer, build profitable relationships, and capture value in return.

M01 · What marketing is

The systematic planning, collection, analysis and reporting of information about customers, markets and competitors, to help make a marketing decision.

M04 · The research process

Return on marketing investment: (incremental contribution − marketing cost) ÷ marketing cost. Variants use gross profit or lifetime value.

M02 · Measuring promotion and bringing the mix together

How a business intends to reach its marketing objectives: which customers it will serve and how it will compete for them.

M01 · Marketing objectives

Profit per unit as a percentage of cost: (price − cost) ÷ cost.

M02 · Pricing approaches

The effect in which outliers inflate the mean and standard deviation used to detect them, so that they, or other outliers, no longer look extreme.

B02 · Outliers and impossible values

Abraham Maslow’s (1943) theory that people have five sets of basic needs (physiological, safety, belonging, esteem and self-actualisation) and that higher needs come to dominate as lower ones are largely satisfied. Research gives little support to a strict order.

M01 · What influences buying

Offering one marketing mix to the whole market, as if all buyers wanted the same thing; also called undifferentiated marketing.

M05 · Why segment?

Information is material if omitting or misstating it could influence the decisions of the people relying on the report. It depends on the size and nature of the item in a particular business; there is no universal threshold.

F01 · What accounting is and why businesses need it

The stage in which sales growth slows and flattens, competition is intense and one brand’s gains come mainly from others. Usually the longest stage.

M02 · The product life cycle

Missing completely at random: whether a value is missing is unrelated to any data, recorded or not.

B02 · Missing values

The sum of the values divided by how many there are; the arithmetic average. Multiplied by the count it gives the total.

B01 · Summarising data: changes, averages and spread

Filling every missing value in a column with the mean of the observed values; it keeps the mean, shrinks the spread and weakens relationships.

B02 · Missing values

A sum of squares divided by its degrees of freedom: an estimate of variance. In one-way ANOVA, MS between = SSB ÷ (k − 1) and MS within = SSW ÷ (N − k).

B04 · One-way analysis of variance (ANOVA)

The average squared distance between an estimate and the true value over repetitions of a survey: bias squared plus variance.

M04 · Survey error

Systematic error from the way a value is measured or a question is asked, which pushes results in one direction.

B01 · Collecting data: sources, samples and bias

The difference between the answer a respondent gives and the true value, from wording, response styles, order, mode or memory. Its systematic part is measurement bias.

M04 · Survey error

The extent to which a measure captures what it is meant to measure, supported by content, construct and criterion evidence. Distinct from validity in the data-quality sense.

M04 · Questionnaire design

Mutually exclusive, collectively exhaustive: a test for the branches of a split or a set of categories, which should not overlap and should together cover every possibility.

B01 · Problem-solving frameworks

The middle value of a set of values sorted in order, with half at or below it and half at or above; with an even number of values, the average of the two middle ones.

B01 · Summarising data: changes, averages and spread

The median of the absolute distances of the values from their median (MAD); a robust measure of spread.

B02 · Outliers and impossible values

A variable on the path between two others, through which one affects the other (x affects m, and m affects y). Holding it fixed removes the part of the link that runs through it.

B05 · Partial correlation

Reshaping from wide to long format, also called unpivoting: several columns become one column of former headers and one column of values.

B02 · Transforming and reshaping data

A business that buys finished goods and resells them without changing them, such as a retailer or wholesaler.

F02 · Inventory and cost of goods sold

A quantity calculated from data by an exact rule, such as the number of orders in a month or the average rating.

B01 · KPIs: measuring what matters

The part of economics that studies the decisions of individual households and firms and how they interact in particular markets.

F00 · Finance, accounting and economics

The actors close to a business that it deals with directly: customers, competitors, suppliers, intermediaries, publics and the rest of the business itself.

M01 · Situation analysis

Tailoring offers and marketing to small local areas (local marketing) or to individual customers (individual marketing), usually with detailed customer data.

M05 · Targeting strategies

A way of calculating elasticity between two observed points that divides each change by the average of the two values, so the answer is the same in either direction. Also called arc elasticity.

M02 · Price, demand and pricing tactics

Rescaling a variable as (x − minimum) ÷ (maximum − minimum), so the training data run from 0 to 1.

B02 · Normalisation and standardisation

A cell where a value should exist but was not recorded, whether it appears as a blank, a code such as NA or −999, a text stand-in such as “unknown”, or an impossible value.

B01 · Data quality: is the data fit for the question?

A 0/1 column that records which values were missing before imputation, kept for auditing and as a possible model input.

B02 · Missing values

A cell reference that fixes either its column ($A1) or its row (A$1), so that only the other part moves when the formula is filled or copied.

B03 · Cells, references and formulas

Missing not at random: whether a value is missing depends on the missing value itself, even after allowing for the recorded variables.

B02 · Missing values

The value that occurs most often in a set of values; the only average available for nominal data.

B01 · Summarising data: changes, averages and spread

A buying situation in which an organisation wants to change the specification, price, terms or supplier of something it has bought before.

M01 · How organisations buy

A robust z-score, 0.6745 × (x − median) ÷ MAD; absolute values above 3.5 are flagged as potential outliers.

B02 · Outliers and impossible values

The assumption that only events measurable in money are recorded, in a currency treated as a stable unit, so changes in its purchasing power are ignored.

F01 · What accounting is and why businesses need it

The market for short-term debt maturing in less than a year, such as Treasury bills and commercial paper.

F00 · Financial markets

A relationship in which one variable never moves against the other: as x increases, y increases or stays level throughout, or decreases or stays level throughout. A straight line is one kind; a curve that keeps rising is another.

B05 · Rank correlation

A loan to buy a property that is secured on that property, so the lender can take the property if the borrower does not repay as agreed.

F04 · Mortgages

A need that has become pressing enough to make a person act to satisfy it.

M01 · What influences buying

An income statement that deducts costs in stages and shows subtotals such as gross profit, operating income and income before income tax before net income.

F02 · The multi-step income statement

Selling the same product through more than one channel at the same time.

M02 · Distribution channels and decisions

Strong linear relationships among the predictors of a regression, which inflate the standard errors of their slopes and make the slopes unstable; perfect multicollinearity makes them impossible to estimate.

B06 · Multicollinearity and model choice

A statistical method that finds the weights on several variables which best separate observations into predefined groups, such as firms that went bankrupt and firms that did not.

F03 · Distress scores

Creating several completed copies of a dataset with different plausible fills, analysing each, and pooling the results so that the uncertainty about the missing values is reflected in the answer.

B02 · Missing values

A least-squares model that predicts y from two or more predictors at once, ŷ = b₀ + b₁x₁ + … + b_kx_k.

B06 · Multiple regression

Running many hypothesis tests on the same data or question, which makes at least one false alarm likely even when every null hypothesis is true.

B04 · Hypothesis testing

A closed question that offers a list of answers and asks for one of them, or for all that apply.

M04 · Questionnaire design

A probability sample drawn in stages, such as towns, then stores within the chosen towns, then shoppers within the chosen stores, so that a full list is needed only at each stage.

M04 · Sampling methods

An SEC-registered investment company that pools money from many investors; investors buy shares from and sell them back to the fund at the NAV calculated once each business day.

F00 · Market participants

Describes events that can’t happen together, so P(A and B) = 0 and P(A or B) = P(A) + P(B).

B04 · Probability

Research in which a trained researcher, posing as an ordinary customer, experiences and records a service; of a company’s own outlets, or with conditions of competitors’.

M04 · Competitor research

A situation in which something outside the control of the people being studied, such as the weather or a rule change, alters a possible cause for some units and not others, allowing a comparison close to an experiment.

B05 · Correlation and causation

Presenting expenses grouped by their nature, such as goods purchased, employee wages, depreciation and rent, without allocating them to activities.

F02 · The multi-step income statement

A record that describes the same entity as another but whose values differ slightly, for example in case, spacing, spelling or a second email address.

B02 · Duplicate records

A state of felt lack that a person or organisation is motivated to fix, such as staying alert or feeling valued at work.

M01 · What marketing is

The first stage of the buying decision process: the buyer notices a gap between their actual state and a desired state, prompted by an internal or external trigger.

M01 · How consumers make buying decisions

Forming segments from how important different needs or benefits are to each buyer, usually measured with importance ratings and grouped by cluster analysis; a post hoc form of benefit segmentation.

M05 · Psychographic and behavioural segmentation

A relationship in which high values of one variable tend to go with low values of the other, so the points of a scatterplot fall from upper left to lower right.

B05 · Scatterplots

The F test of whether the terms dropped from a full regression model to give a reduced one improve the fit: F = ((SSE_R − SSE_F)/q) ÷ (SSE_F/(n − p_F)). Also called the general linear F test or partial F test.

B06 · Multicollinearity and model choice

A function used as an argument of another function, as in ROUND(AVERAGE(M2:M232),2); the inner one is calculated first.

B03 · Functions, logic, text and dates

A fund’s assets minus its liabilities; per share, divided by the number of fund shares outstanding (NAV).

F00 · Market participants

Assets minus liabilities; another name for equity.

F01 · The accounting equation

Debt minus cash. Enterprise value equals market capitalisation plus net debt.

F00 · Value and valuation words

Revenue minus expenses for a period. A negative result is a net loss.

F01 · The accounting equation

Net income divided by net revenue: the share of each dollar of revenue the owners keep after all expenses, interest and tax. Also called the net profit margin.

F03 · Common-size statements

The sum of the present values of all the cash flows a decision causes, including any paid or received today, with money received positive and money paid negative, each discounted at the return available elsewhere at similar risk. A positive NPV is the value the decision adds, in today’s money. Often shortened to NPV.

F04 · Discounting cash flows

What the issuer receives from an offering after the underwriting spread: shares sold × offer price × (1 − spread).

F00 · Market participants

A loyalty measure from answers to “How likely is it that you would recommend [company] to a friend or colleague?” on a 0 to 10 scale: the percentage of promoters (9–10) minus the percentage of detractors (0–6), from −100 to +100 (Reichheld, 2003).

M04 · Questionnaire design

For inventory, the estimated selling price in the ordinary course of business less the estimated costs of completion and of making the sale.

F02 · Inventory and cost of goods sold

Accounts receivable minus the allowance for doubtful accounts: the amount a business expects to collect. Also called the net realisable value of receivables.

F02 · Receivables and payables

Gross revenue less sales returns and allowances and sales discounts; also called net sales. The first total on a multi-step income statement.

F02 · Revenue recognition

A buying situation in which an organisation buys something for the first time, with the most uncertainty, information search and people involved.

M01 · How organisations buy

The allocation of a stratified sample that minimises the standard error of the overall estimate for a fixed total: n_h in proportion to N_h × S_h, the stratum’s size times its standard deviation.

M04 · Sampling methods

A narrowly defined group of customers, usually within a segment, whose distinctive needs larger competitors serve poorly.

M05 · Targeting strategies

Shares issued without a par value. Unless the board assigns a stated value, the whole amount received is credited to Common Stock.

F02 · The balance sheet and equity

An amount of money in the dollars of the date it is paid or received, with no adjustment for inflation. Also called current dollars.

F04 · Inflation and real returns

A yearly interest rate quoted without compounding: the periodic rate multiplied by the number of periods in a year. An APR in its simple sense is a nominal annual rate.

F04 · Effective annual rates

The percentage change in the number of dollars an investment is worth, before allowing for inflation.

F00 · Interest and inflation

A categorical variable whose categories have no natural order, such as region or product. Supports equality, counts and the mode.

B01 · Types of data

A space character (Unicode U+00A0) that looks like an ordinary space but is a different character, often left behind by web pages and documents, and not removed by some trim functions.

B02 · Text cleaning and consistent categories

A choice rule under which a weakness on one attribute can’t be made up by strength on another, such as a cut-off every option must pass (conjunctive) or choosing the best option on the most important attribute (lexicographic).

M01 · How consumers make buying decisions

A measure of financial performance or position, such as EBITDA, that is not defined by the accounting framework used in the financial statements.

F02 · The multi-step income statement

A sample in which the chance that each unit is selected is unknown, because units are chosen by judgement, convenience, quotas, referral or their own decision to take part.

M04 · Sampling methods

Systematic error that arises when the people who answer a survey differ, in what is being measured, from those who don’t.

B01 · Collecting data: sources, samples and bias

An expense that reduces net income without any cash payment in the period, such as depreciation, amortisation or an impairment loss. The indirect method adds it back.

F02 · The indirect method

Investing and financing transactions that change assets or liabilities without any cash moving, such as buying equipment by signing a note or converting debt into stock. They are left out of the statement of cash flows and disclosed separately.

F02 · The statement of cash flows

Any asset that is not current, typically one the business expects to use for more than a year, such as equipment, vehicles, buildings and land.

F01 · Accounts, terminology and classifications

An obligation not due for settlement within one year or the operating cycle, such as the later instalments of a long-term loan.

F01 · Accounts, terminology and classifications

The side on which an account records increases, and so the side on which its balance usually sits: debit for assets, expenses and dividends; credit for liabilities, equity, revenue and contra-asset accounts.

F01 · Debits, credits and normal balances

The symmetric, bell-shaped continuous distribution fixed by its mean μ and standard deviation σ, written N(μ, σ). About 68%, 95% and 99.7% of its values lie within one, two and three standard deviations of the mean.

B04 · The normal distribution

A scatter chart of a sample’s sorted values against the normal scores for their positions. The points lie close to a straight line when the data are close to normal; curvature shows skew or tails unlike a normal distribution’s.

B04 · The normal distribution

A written promise by a customer or borrower to pay a stated sum on a stated date, usually with interest.

F02 · Receivables and payables

A graph of a decision’s net present value against the discount rate. For a conventional project it slopes down and crosses zero at the internal rate of return.

F04 · Discounting cash flows

Any aspect of how a choice is presented that changes behaviour predictably without forbidding options or significantly changing incentives (Thaler and Sunstein, 2008). A nudge can help or harm the person nudged.

M01 · What influences buying

In a hypothesis test, the statement assumed true while the test is calculated, usually “no difference” or “as specified”. It contains an equality (=, ≤ or ≥) and is written H₀.

B04 · Hypothesis testing

A variable whose values are amounts found by counting or measuring, such as visits, packs ordered or an order total. It is discrete or continuous.

B01 · Types of data

In an optimisation model, the quantity to be maximised or minimised, such as total contribution; in Solver, the formula in the objective cell.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

Setting the promotion budget by defining specific objectives, listing the tasks needed to achieve them and adding up the cost of those tasks.

M02 · The promotion mix and integrated marketing communications

One row of a dataset: all the values recorded for one instance of the unit of observation. Also called a record.

B01 · Types of data

The probability that an event happens divided by the probability that it doesn’t, p ÷ (1 − p); odds of 3 mean the event is three times as likely to happen as not.

B06 · Logistic regression

The factor by which the odds of an outcome are multiplied between two groups, or for a one-unit rise in a predictor; in logistic regression, e raised to the coefficient. An odds ratio of 1 means no association.

B06 · Logistic regression

Figures published by government statistical offices and agencies, such as population counts, business counts and household surveys, usually with documented methods and definitions.

M04 · Secondary research

The change in a slope caused by leaving out a predictor that affects y and goes with the included predictor; for least squares the short slope is b₁ + b₂δ, δ being the slope of the omitted predictor on the included one.

B06 · Multiple regression

Managing several channels as one system from the customer’s point of view, with consistent prices, promotions, stock information and service across them.

M02 · Distribution channels and decisions

Encoding a categorical variable with k categories as k columns of 0s and 1s, with a 1 in the column of each row’s category.

B02 · Encoding categorical variables

A test of whether a population proportion equals a stated value p₀, using z = (p̂ − p₀) ÷ √(p₀(1 − p₀) ÷ n) and the standard normal distribution.

B04 · Hypothesis testing

A test of whether a population mean equals a stated value, using t = (x̄ − μ₀) ÷ (s ÷ √n) and the t distribution with n − 1 degrees of freedom.

B04 · Hypothesis testing

A hypothesis test whose alternative points in one direction (< or >), so the p-value comes from one tail. Also called a one-tailed test.

B04 · Hypothesis testing

A survey question that lets respondents answer in their own words or with their own number, rather than choosing from a list.

M04 · Questionnaire design

Cash flows from running the business: receipts from customers and payments to suppliers, employees and others; under US GAAP also interest paid and received.

F01 · Financial statements from the adjusted trial balance

The cash brought in by a business’s day-to-day activities minus the cash those activities paid out, over a period.

F00 · Finance, accounting and economics

Net cash from operating activities for a period divided by current liabilities at its end: how much of what is owed within the year one period’s operations would pay.

F03 · Liquidity

The average time between acquiring the materials or services a business works with and collecting cash from the customers it sells to.

F01 · Accounts, terminology and classifications

The costs of running a business that are not part of cost of sales, such as selling, general and administrative costs, rent and depreciation.

F02 · The multi-step income statement

Gross profit less operating expenses: what a business earns from its ordinary activities before interest, other non-operating items and income tax. Also called income from operations or operating profit. Under US GAAP it includes gains and losses on selling long-lived assets.

F02 · The multi-step income statement

Operating income divided by net revenue: the share of each dollar of revenue left after the costs of running the business, before interest and income tax.

F03 · Common-size statements

The current assets other than cash and the current liabilities that arise from day-to-day operations: receivables, inventory, prepayments, accounts payable, accrued expenses, unearned revenue and income taxes payable. Current items that belong to investing or financing, such as short-term investments, the current portion of long-term debt and dividends payable, are excluded.

F02 · The indirect method

An exact statement of how a concept is measured: which records count, from which source, by which rule and over which period, so that two people applying it to the same data get the same number.

B01 · Business questions and measurable objectives

A person whose views others in a group seek out and follow because of their knowledge, experience or standing, not necessarily their wealth or education.

M01 · What influences buying

The value of the best alternative given up when a choice is made, such as the salary an owner forgoes to run her own business.

F00 · Finance, accounting and economics

A pool of volunteers who have signed up to take surveys, usually for rewards; samples drawn from it are self-selected, not probability samples.

M04 · Sampling methods

Finding the choice that gives the best value of a goal, such as the highest profit or the lowest cost, while meeting the constraints on the decision.

B01 · The four kinds of analytics

A change in the answers to a question caused by the questions asked before it, which provide a context for it.

M04 · Questionnaire design

Listing assets from the most easily turned into cash (cash, then receivables, inventory and prepayments) to the least, and liabilities in roughly the order they fall due.

F02 · The balance sheet and equity

Encoding an ordered categorical variable as integers that follow its order, in one column. It assumes equal steps between levels.

B02 · Encoding categorical variables

A categorical variable whose categories have a meaningful order but no fixed distance between them, such as a 1–5 rating. Also supports the median and percentiles.

B01 · Types of data

An annuity whose payments are made at the end of each period, so the first payment comes one period from now. The default meaning of “annuity”.

F04 · Annuities

Income and expenses that accounting standards require to be reported outside profit or loss and accumulated in a separate part of equity, such as revaluation increases on property under IAS 16.

F02 · US GAAP and IFRS

Income and expenses that do not arise from a business’s main operations, such as interest revenue and interest expense. Shown after operating income. Under US GAAP, gains and losses on selling long-lived assets are not among them: they are included in operating income.

F02 · The multi-step income statement

An observation that lies an abnormal distance from the other values in a dataset; it may be an error or a genuine extreme.

B02 · Outliers and impossible values

The principal still owed on a loan at a given date: the present value of the remaining payments at the loan rate.

F04 · Loan amortisation

Shares that have been issued and are held by shareholders, that is, issued shares less any held as treasury stock. They carry votes and receive dividends.

F02 · The balance sheet and equity

Dividing a market into more segments than a business can use: segments too small to pay for an offer of their own, too similar to respond differently, or too unstable to plan for.

M05 · Why segment?

A market without a central marketplace, in which trades are negotiated between two parties, usually with a dealer (OTC).

F00 · Financial markets

The test of a regression model’s null hypothesis that every slope is zero, F = (SSR/k) ÷ (SSE/(n − p)) on k and n − p degrees of freedom; Significance F in Excel’s output.

B06 · Multiple regression

Units on the sampling frame that are outside the target population, such as people who have never bought on a list used to survey customers; unless screened out, their answers are mixed in.

M04 · Sampling methods

Fitting a model so closely to its own data, noise included, that it predicts new data worse than a simpler model would.

B06 · Multicollinearity and model choice

Points of a chart drawn on top of one another, so that the chart hides how many observations lie in each place.

B05 · Scatterplots

For FDIC insurance, the capacity in which deposits are held (single, joint, certain retirement, trust, business, and others); each category at each bank is insured separately.

F00 · Market participants

Trying analyses (outcomes, subgroups, exclusions, stopping points, one tail or two) until one gives a significant p-value and reporting that one, which makes the reported p-value misleadingly small.

B04 · Hypothesis testing

The probability of a result at least as extreme as the one observed if the null hypothesis (for a regression coefficient, that it is 0) were true. A small p-value is evidence against the null hypothesis, not the probability that it is true.

B03 · Descriptive statistics and regression in Excel

Price-to-earnings ratio: share price divided by earnings per share, or market capitalisation divided by net income.

F00 · Value and valuation words

The container and wrapping of a product, which protects it, makes it convenient, informs the buyer and promotes it at the point of choice.

M02 · Product decisions

Two sets of measurements in which each value in one belongs with one value in the other, such as the same people measured before and after, or units matched in pairs.

B04 · Comparing two means

A test of whether the mean of paired differences is zero (or a stated value): a one-sample t test on the differences, with n − 1 degrees of freedom. Excel’s T.TEST type 1.

B04 · Comparing two means

Computing each statistic from all rows that have the values it needs, so different statistics use different rows; also called available-case analysis.

B02 · Missing values

Data on the same units at several points in time, such as each customer’s spending in each month. Also called longitudinal data.

B01 · Types of data

A nominal amount per share set in a corporation’s charter, often a cent or less, with legal rather than economic meaning. In states such as Delaware, shares with a par value can’t be issued for less than par.

F02 · The balance sheet and equity

A number that describes a population, such as its mean μ, standard deviation σ or proportion p. It is usually unknown and is estimated from a sample.

B04 · Describing distributions

The correlation between two variables after the straight-line part of their links with one or more other variables has been removed: the correlation of their residuals. Written r_xy·z for one control z.

B05 · Partial correlation

A slope in a multiple regression: the change in the fitted value of y per unit of one predictor, holding the other predictors in the model fixed. Also called a partial regression coefficient.

B06 · Multiple regression

An exclusive legal right to make, use and sell an invention. A US utility patent runs for 20 years from the date the application was filed.

F02 · Long-lived assets

The date a declared dividend is paid, settling the dividends payable.

F02 · The balance sheet and equity

The correlation coefficient for straight-line association: the covariance of two variables divided by the product of their standard deviations, from −1 to +1. Also called the Pearson product-moment correlation.

B05 · Covariance and Pearson’s r

The set of comparable businesses, chosen for a similar business model, size, ownership and accounting basis, whose figures provide a benchmark.

F03 · Benchmarking and annual reports

Launching a new product at a low price to win many buyers quickly, accepting a low margin per unit in exchange for volume.

M02 · Price, demand and pricing tactics

The number of a business’s customers in an area or group per 1,000 (or per 100) households or people there; it compares how well the business has done in different areas.

M05 · Demographic and geographic segmentation

A fund that invests contributions from employers and employees to pay retirement income.

F00 · Market participants

The change in a value divided by its starting value, times 100: (new − old) ÷ old × 100. The starting value is the base.

B01 · Summarising data: changes, averages and spread

The unit for the difference between two percentages: a change from 8% to 5% is a fall of 3 percentage points (and a relative fall of 37.5%).

B01 · Summarising data: changes, averages and spread

Setting the promotion budget as a fixed percentage of past or forecast sales.

M02 · The promotion mix and integrated marketing communications

The value with a given percentage of the sorted data at or below it, interpolating between values when needed; the 25th, 50th and 75th percentiles are the quartiles.

B03 · Descriptive statistics and regression in Excel

The percentage of values in a data set that lie below a given value (with a stated rule for ties). Excel’s PERCENTRANK.INC gives a related fraction: the values below it ÷ (n − 1), cut to three digits.

B04 · Describing distributions

The process by which a person selects, organises and interprets information to form a meaningful picture of the world.

M01 · What influences buying

A chart that places competing brands by how customers perceive them, so that brands seen as alike sit close together; built from customers’ ratings or similarity judgements.

M05 · Perceptual maps

A promise in a contract to transfer a distinct good or service to a customer. Revenue is recognised as each one is satisfied, at a point in time or over time.

F01 · Accrual versus cash accounting

A system that records purchases in a Purchases account and calculates cost of goods sold only at the end of the period, from a physical count of ending inventory.

F02 · Inventory and cost of goods sold

The interest rate charged or paid for one compounding period: the nominal annual rate divided by the number of periods in a year.

F04 · Effective annual rates

An account whose balance carries forward from one period to the next: every asset, liability and equity account, including contra-asset accounts. Also called a real account.

F01 · Accounts, terminology and classifications

A system that updates the Inventory account with every purchase and records cost of goods sold with every sale.

F02 · Inventory and cost of goods sold

A stream of equal payments at equal intervals that continues for ever. Its present value is the payment divided by the rate per period, C ÷ r.

F04 · Perpetuities and growth

A perpetuity whose first payment is made today. Worth the payment plus an ordinary perpetuity: C + C ÷ r.

F04 · Perpetuities and growth

Under the UK GDPR, any information relating to an identified or identifiable natural person: someone who can be identified directly or indirectly, for example from a name, an identification number, location data or an online identifier.

B01 · Collecting data: sources, samples and bias

The branch of finance concerned with the decisions of individuals and households: budgeting, saving, borrowing, insurance and retirement.

F00 · What finance is: money, time and risk

Person-to-person communication by a salesperson aimed at making sales and building customer relationships.

M02 · The promotion mix and integrated marketing communications

The distinctive and relatively stable pattern of traits that shapes how a person thinks, feels and behaves, such as sociability or openness to new experiences.

M05 · Psychographic and behavioural segmentation

A checklist for scanning the macroenvironment: political, economic, social, technological, environmental and legal factors. Variants include PEST, STEEP and STEEPLE.

M01 · Situation analysis

Reshaping from long to wide format: the values of one column become column headers. It needs exactly one value for each pair of row label and column label.

B02 · Transforming and reshaping data

The copy of the source data that a PivotTable summarises; the PivotTable shows new or corrected data only after it is refreshed.

B03 · PivotTables

Excel’s interactive summary table: it groups the records of a source by the fields placed in its Rows and Columns areas and aggregates a field placed in its Values area, rebuilding when fields are moved.

B03 · PivotTables

A test of a value against a rule the business or the physical world makes obvious, such as a conversion rate between 0 and 1 or a wait that cannot be negative, used to find recording errors.

B05 · Outliers and influence

A single number calculated from a sample to estimate a parameter, such as a sample mean for the population mean.

B04 · Confidence intervals

The value of a fitted regression at a new x, ŷ₀ = b₀ + b₁x₀: the estimate of the mean response there and the best single guess for one new case.

B06 · Prediction and intervals

Benefits that set an offer apart from its competitors; to work they must be relevant and believable to the target, and feasible, profitable and defensible for the firm.

M05 · Positioning statements

Features an offer shares with its competitors and must be good enough at to be accepted as a credible member of its frame of reference.

M05 · Positioning statements

The distribution of the number of events in a fixed interval when events occur independently at a constant average rate λ; its mean and variance both equal λ.

B04 · Discrete distributions

A regression that includes powers of a predictor (x², x³, …) as extra predictors so the fitted relationship can curve; the curve’s shape is set over the whole range of x at once.

B06 · Transformations and influence

Observations from several groups combined into one dataset and analysed together, ignoring which group each came from.

B05 · Groups and Simpson’s paradox

The proportion of successes in two samples combined, (x₁ + x₂) ÷ (n₁ + n₂): the estimate of a common proportion used in the standard error of a two-proportion z test.

B04 · Proportions and chi-square tests

The two-sample t test that assumes equal population variances and combines the two sample variances into one pooled variance, with n₁ + n₂ − 2 degrees of freedom. Also called Student’s two-sample t test; Excel’s T.TEST type 2.

B04 · Comparing two means

Everything a question is about: all the people, things or events whose characteristics you want to know.

B01 · Collecting data: sources, samples and bias

The correlation of two variables over a whole population or process, written ρ (rho), which a sample’s r estimates.

B05 · Covariance and Pearson’s r

The model y = β₀ + β₁x + ε that a sample regression estimates: a population line giving the average of y at each x, plus an error ε for how far each case falls from it.

B06 · Inference for coefficients

The place a business wants its offer to occupy in target customers’ minds, relative to competing offers.

M01 · Competitive advantage

A short internal statement of a positioning: the target, the frame of reference, the point of difference and the reason to believe.

M05 · Positioning statements

A relationship in which high values of one variable tend to go with high values of the other, so the points of a scatterplot rise from lower left to upper right.

B05 · Scatterplots

Segmentation in which the groups are formed from the data, usually by clustering people on many variables such as their needs; also called data-driven segmentation.

M05 · Why segment?

A trial balance prepared after the closing entries are posted. It contains only permanent accounts and confirms that debits equal credits as the next period begins.

F01 · Closing entries

Discomfort after a purchase when the buyer doubts the choice, often because the rejected options had attractive features; also called buyer’s remorse.

M01 · How consumers make buying decisions

Weighting respondents after a survey so that each group’s weighted total matches its known population count: each respondent in group h gets the weight N_h ÷ n_h.

M04 · Survey error

Copying each line of a journal entry to the ledger account it names, on the same side, with the same date and amount.

F01 · Posting to the general ledger

A cross-reference written during posting: the journal page in the ledger account, and the account number in the journal, so any amount can be traced in both directions.

F01 · Posting to the general ledger

The probability that a test rejects the null hypothesis when a particular alternative is true, 1 − β. It rises with the sample size, the true difference and the significance level, and falls as the spread grows.

B04 · Hypothesis testing

Excel’s tool for importing and reshaping data (Data › Get & Transform Data), which records each transformation as a step and reruns all of them when the query is refreshed.

B03 · Excel tables and cleaning data

Whether an effect is large enough to matter for a decision, judged from its estimated size and interval in the units of the problem, not from its p-value.

B04 · Hypothesis testing

An interval for the value of y in one new case at a given x, ŷ₀ ± t* × s√(1 + 1/n + (x₀ − x̄)²/Sxx) in simple regression. Always wider than the interval for the mean, because it adds the new case’s own error.

B06 · Prediction and intervals

Analytics that answers “what will happen?” by using past patterns to estimate future or unknown values, such as a forecast of demand or the probability that a customer orders again.

B01 · The four kinds of analytics

A class of shares that pays a fixed dividend, usually stated as a percentage of par value, and ranks ahead of common stock for dividends and in a liquidation, usually without voting rights. Called preference shares in the UK.

F04 · Perpetuities and growth

A cost paid in advance for benefits to be received in later periods, such as insurance or rent. It is an asset until it is used up.

F01 · Adjusting entries

Repaying principal earlier than the schedule requires, which reduces the interest charged and, if the payment is kept the same, shortens the loan.

F04 · Loan amortisation

A fee some loan agreements charge if the borrower repays all or a large part of the loan early.

F04 · Loan amortisation

Analytics that answers “what should we do?” by combining predictions with the options, costs, constraints and goals of a decision to recommend an action.

B01 · The four kinds of analytics

What an amount to be received in the future is worth today, at a given discount rate: PV = FV ÷ (1 + r)ⁿ.

F00 · What finance is: money, time and risk

A trial of a questionnaire with people like the intended respondents before fieldwork, to find questions they misunderstand or can’t answer and to check the routing, timing and data.

M04 · Questionnaire design

A calculation that traces a product’s price through each level of the channel, from what the producer receives to what the final customer pays.

M02 · Distribution channels and decisions

The highest price customers would pay, set by the value they place on the product compared with their alternatives.

M02 · Pricing approaches

The process by which trading among many buyers and sellers produces a price that reflects their combined information and expectations.

F00 · Financial markets

Charging different customers different prices for the same product when the difference does not reflect a difference in cost. Also called segmented pricing.

M02 · Price, demand and pricing tactics

The percentage change in quantity demanded divided by the percentage change in price. Usually negative; this course keeps the sign, while many texts report the absolute value.

M02 · Price, demand and pricing tactics

The lowest price worth accepting, set by costs: in the short run the variable cost per unit; in the long run a price that covers all costs at a realistic volume.

M02 · Pricing approaches

A number tracking the cost of a fixed basket of goods and services over time, set to 100 in a base period.

F00 · Interest and inflation

The amount by which a firm’s price exceeds a rival’s for a comparable offer, usually as a percentage of the rival’s price.

M01 · Competitive advantage

Launching a new product at a high price to sell first to the buyers who value it most, then lowering the price in steps to reach more buyers.

M02 · Price, demand and pricing tactics

The tendency to choose options near the start of a list, most common when respondents read the list themselves.

M04 · Questionnaire design

Data collected for the question at hand, such as a survey designed to answer it.

B01 · Types of data

A column, or set of columns, whose values identify each row uniquely: no two rows share a value and none is blank.

B02 · Datasets: rows, columns, records and variables

The market in which new securities are sold for the first time, with the money going to the issuer.

F00 · Financial markets

The amount originally borrowed or invested, on which interest is calculated.

F00 · Capital and liquidity

In an agency relationship, the person whose interests are at stake and who delegates decisions to an agent.

F00 · Governance and the agency problem

In revenue recognition, a business that controls a good or service before it is transferred to the customer. It recognises revenue at the gross amount the customer pays.

F02 · Revenue recognition

A method that summarises many correlated variables in a few uncorrelated dimensions, the first carrying the most variance, the second the most of what is left, and so on. On a perceptual map it is applied to brands’ standardised mean ratings.

M05 · Perceptual maps

The body set up in 2012 by the Financial Accounting Foundation, which oversees the FASB, as the FASB’s main advisory body on private-company matters. It develops accounting alternatives that private companies may elect, subject to the FASB’s endorsement.

F02 · US GAAP and IFRS

A number from 0 (impossible) to 1 (certain) that measures how likely an event is; the probabilities of all the outcomes in a sample space add to 1.

B04 · Probability

A curve that describes a continuous random variable: the area under it between two values is the probability that the variable falls between them, and the total area under it is 1. Its height is not a probability.

B04 · The normal distribution

For a discrete random variable, a list or formula giving every value it can take and its probability, with the probabilities adding to 1; for a continuous variable, a density curve whose area over a range is the probability of that range.

B04 · Discrete distributions

A sample drawn by a random mechanism so that every unit on the frame has a known chance of selection greater than zero, which is what makes standard errors and margins of error meaningful.

M04 · Sampling methods

A neutral follow-up prompt in an interview or group, such as “What makes you say that?”, that asks for more without suggesting an answer.

M04 · Qualitative research

Error introduced after answers are collected, in recording, coding, editing, merging or weighting the data.

M04 · Survey error

Anything offered to a market to satisfy a want or need: physical goods, services, experiences, places, organisations or ideas.

M02 · Product decisions

The belief that customers want the best quality, performance and features, so a business should concentrate on continually improving its product.

M01 · Market orientation: putting customers at the centre

The typical pattern of a product’s sales and profits over time, from introduction through growth and maturity to decline.

M02 · The product life cycle

A group of closely related products that meet similar needs, are sold to similar customers or go through similar channels.

M02 · Product decisions

The number of versions offered of each item in a line, such as sizes, flavours or colours (in Kotler’s convention).

M02 · Product decisions

The number of items in a product line (in Kotler’s convention; OpenStax calls this depth).

M02 · Product decisions

All the product lines and items a company sells; also called the product portfolio.

M02 · Product decisions

How closely a company’s product lines are related in end use, production, distribution channels or customers.

M02 · Product decisions

The number of different product lines a company carries.

M02 · Product decisions

The belief that customers want offers that are available and affordable, so a business should concentrate on making as much as it can as efficiently as possible.

M01 · Market orientation: putting customers at the centre

Describing segments on the segmentation variables that formed them, for example as indexes against the average, to see what each segment wants.

M05 · Profiling segments

The size of a temporary price cut as a percentage of the regular price: (regular − promoted) ÷ regular.

M04 · Competitor research

The combination of communication tools (advertising, sales promotion, personal selling, public relations, and direct and digital marketing) a business uses to communicate with its audiences.

M02 · The promotion mix and integrated marketing communications

Tangible assets a business uses to produce or supply goods and services, rent to others or administer itself, and expects to use for more than one year, such as land, buildings, vehicles and equipment. Also called fixed assets.

F02 · Long-lived assets

A part divided by the whole it belongs to, a number between 0 and 1. Multiplied by 100 it is a percentage.

B01 · Summarising data: changes, averages and spread

Dividing a stratified sample among strata in proportion to their sizes, n_h = n × N_h ÷ N, so that every unit has the same chance of selection.

M04 · Sampling methods

Describes data in which direct identifiers such as names or e-mail addresses are replaced by codes, so that records can still be linked but people can’t be identified without separately held information.

B02 · Data quality reporting and a reproducible workflow

Dividing a market by how people live and what they are like: their lifestyle (activities, interests and opinions), values and personality.

M05 · Psychographic and behavioural segmentation

Setting prices with regard to how buyers perceive numbers, for example charm prices just below a round number, or round prices that suggest quality.

M02 · Price, demand and pricing tactics

A US GAAP term for a business that meets any of five criteria, such as filing financial statements with the SEC or having securities traded, listed or quoted on an exchange or an over-the-counter market. Some standards, such as ASU 2024-03, apply only to public business entities.

F02 · US GAAP and IFRS

The branch of finance (often treated as part of economics) concerned with how governments tax, spend and borrow.

F00 · What finance is: money, time and risk

Building good relationships with a company’s publics and earning favourable coverage, for example through press releases, events and sponsorships.

M02 · The promotion mix and integrated marketing communications

Directing promotion at final customers to create demand that draws the product through the channel.

M02 · The promotion mix and integrated marketing communications

A question about how likely respondents are to buy a described product, on verbal points such as “definitely would buy”, “probably would buy”, “might or might not”, “probably would not” and “definitely would not”.

M04 · Questionnaire design

What a given amount of money can buy. Inflation reduces it.

F00 · Interest and inflation

Directing promotion at channel members, through personal selling and trade promotions, so that they stock, support and sell the product.

M02 · The promotion mix and integrated marketing communications

Research that collects words, actions and images from a small number of deliberately chosen people, to understand what they think, how they talk about it and why. Its output is themes and explanations, not estimates for a population.

M04 · Qualitative research

Research that measures how many, how much and how often, such as a survey of a planned sample or an analysis of records, and, from a probability sample, can estimate a population’s figures with a margin of error.

M04 · Qualitative research

One of the three values that divide sorted data into four equal parts: a quarter of the data lie below the first quartile (Q1), half below the second (the median) and three-quarters below the third (Q3).

B01 · Summarising data: changes, averages and spread

A fixed set of questions asked in the same words and order of every respondent, with answers recorded in a fixed form so that they can be counted and compared.

M04 · Questionnaire design

Cash, short-term investments and receivables divided by current liabilities. It leaves out inventory and prepayments. Also called the acid-test ratio.

F00 · Capital and liquidity

A non-probability sample in which interviewers fill set numbers of respondents in groups defined by easily observed traits, such as age and sex, choosing whom to approach within each group.

M04 · Sampling methods

The share of the variation of y around its mean that a regression accounts for, from 0 to 1; with one X it is the square of the correlation coefficient. Also called the coefficient of determination.

B03 · Descriptive statistics and regression in Excel

A number determined by the outcome of an experiment, such as the number of orders on a day. It is discrete if it takes separate values (usually counts) and continuous if it can take any value in a range.

B04 · Discrete distributions

A study in which the analyst assigns the change to units by chance, so that nothing else can systematically line up with it and a difference in outcomes can be attributed to the change.

B05 · Correlation and causation

The largest value minus the smallest: a measure of spread that depends only on the two extremes.

B01 · Summarising data: changes, averages and spread

A validation rule that a value lies between a minimum and a maximum.

B02 · Profiling a dataset and writing validation rules

Analysing only part of the range a variable can take, such as summer days or hired applicants. It usually shrinks a correlation, though it can raise one when the part selected is where a curve is steepest.

B05 · Curves, thresholds and restricted ranges

An observation’s position when the values of a variable are sorted, usually from the smallest (rank 1) to the largest (rank n).

B05 · Rank correlation

A question that asks respondents to put a set of options in order, such as from most to least important. The ranks are ordinal and say nothing about how far apart the options are.

M04 · Questionnaire design

A limit on how much an adjustable rate can change at the first reset, at each later reset, or in total over the life of the loan.

F04 · Mortgages

The number of units of a product an outlet sells in a period, usually per store per week; also called velocity.

M04 · Market sizing

A question format in which respondents place a judgement on a set of ordered points, such as five points from very dissatisfied to very satisfied, or 0 to 10.

M04 · Questionnaire design

A numerical variable with a true zero meaning “none”, so differences and ratios are both meaningful, such as quantity, price or nights stayed.

B01 · Types of data

Data exactly as received from their source, before any cleaning or transformation. Kept read-only so that every cleaned version can be rebuilt from them.

B02 · Data quality reporting and a reproducible workflow

The number or percentage of different people in the target audience exposed to a campaign at least once.

M02 · Measuring promotion and bringing the mix together

An amount of money restated in the purchasing power of a chosen base period, by dividing out the inflation since that period. Also called constant dollars.

F04 · Inflation and real returns

An interest rate adjusted for inflation: what borrowing really costs, or lending really earns, in purchasing power.

F00 · Interest and inflation

The percentage change in the purchasing power of an investment: (1 + nominal return) ÷ (1 + inflation) − 1.

F00 · Interest and inflation

The proof in a positioning statement that makes its point of difference credible: something customers can check, such as an ingredient, a method or a guarantee.

M05 · Positioning statements

The tendency to choose options near the end of a list, most common when respondents hear the list read aloud.

M04 · Questionnaire design

A formula that compares a total shown in a report with the same total calculated another way, such as from the source data or the accounts, and flags any difference.

B03 · Dashboards that answer questions

Two or more variables so closely correlated that they carry nearly the same information, so that using both adds little and can double-count evidence.

B05 · Correlation matrices

The category left without a dummy variable. The intercept describes it, and each dummy coefficient is a difference from it. Also called the baseline.

B02 · Encoding categorical variables

A group a person compares themselves with, belongs to, would like to belong to or wants to avoid resembling, whose standards influence what they buy.

M01 · What influences buying

The price a buyer expects or regards as normal for a product, formed largely from past prices, against which an actual price is judged as a gain or a loss.

M02 · Price, demand and pricing tactics

The condition that every reference from one table to another (a foreign key) points to a row that exists.

B02 · Profiling a dataset and writing validation rules

The factor by which referrals multiply the customers won directly: 1 ÷ (1 − r) in the long run when each new customer refers r new customers on average (r below 1).

M01 · What influences buying

Replacing an existing loan with a new one, usually at a lower rate or for a different term, and using the new loan to pay off the old balance.

F04 · Loan amortisation

A liability for the amount a business expects to refund to customers, for example for goods it expects to be returned. Revenue is not recognised for that amount.

F02 · Revenue recognition

A straight line, ŷ = b₀ + b₁x, fitted to paired data to describe how the average of y changes with x.

B03 · Descriptive statistics and regression in Excel

SSR = Σ(ŷ − ȳ)²: the part of the total sum of squares that the fitted values account for. With least squares and an intercept, SSR = SST − SSE.

B06 · Residuals and R²

The tendency of unusually high or low measurements, which are partly due to chance, to be followed by measurements closer to the average.

B01 · Interpreting results: charts, comparisons and causes

A pattern that describes a set of text strings, used to find, check, extract or replace text.

B02 · Text cleaning and consistent categories

The values of the test statistic for which the null hypothesis is rejected at the chosen significance level: those beyond the critical value or values.

B04 · Hypothesis testing

The number of times an event occurs divided by the number of trials or observations; used as an estimate of its probability.

B04 · Probability

A cell reference without dollar signs, such as A1, which Excel adjusts when the formula is filled or copied, so that it keeps the same position relative to the formula’s cell.

B03 · Cells, references and formulas

The quality of information that is capable of making a difference to users’ decisions, through predictive value, confirmatory value or both. One of the two fundamental qualitative characteristics.

F01 · What accounting is and why businesses need it

The consistency of a measure: whether it gives the same result when what it measures hasn’t changed, across repeated measurements, across the items of a scale or across observers.

M04 · Questionnaire design

A balance sheet layout with assets listed first and liabilities and equity below them.

F02 · The balance sheet and equity

An attempt to move an existing offer to a different place in customers’ minds, by changing what they believe about it relative to competing offers.

M05 · Differentiation and repositioning

The property that running the same steps on the same data gives the same result every time.

B02 · Data quality reporting and a reproducible workflow

A formal invitation to suppliers to propose how they would meet a stated need and at what price, used when the buyer wants to compare solutions as well as prices.

M01 · How organisations buy

The document in which the client describes the decision, the background, what it needs to know, whom to study, the timing and the budget, so that researchers can propose a study.

M04 · The research process

A specific, measurable statement of what a study will deliver, such as an estimate, a comparison or an explanation, chosen because its answer bears on a decision.

M04 · The research process

The information needed to make a decision, stated as what the research must find out.

M04 · The research process

The researcher’s answer to a brief: the objectives as understood, the design and methods, the sample, the analysis, the deliverables, the timetable and the cost.

M04 · The research process

Changing the layout of a table between wide and long format without changing its values.

B02 · Transforming and reshaping data

The actual value of y minus the value the regression line predicts for it.

B03 · Descriptive statistics and regression in Excel

The confounding that remains after adjusting for a confounder that is measured imperfectly or held fixed only roughly, such as by a straight line or in broad bands.

B05 · Partial correlation

A scatterplot of a model’s residuals against an explanatory variable, the fitted values or the order of the observations. Residuals with no pattern around zero suggest the model’s form fits; a curve, a funnel or a trend says it doesn’t.

B06 · Residuals and R²

SSE = Σ(y − ŷ)²: the sum of the squared residuals, the quantity least squares makes as small as possible. Also called the error sum of squares.

B06 · Residuals and R²

The amount a business expects to receive for an asset at the end of its useful life. Also called salvage value.

F01 · Adjusting entries

The share of the people invited to a survey who answered it: responses ÷ people invited × 100. Say whether invitations that never arrived are counted.

B01 · Collecting data: sources, samples and bias

A tendency to answer survey questions in a particular way regardless of their content, such as agreeing, choosing the end points or choosing the middle.

M04 · Questionnaire design

In a pair of variables, the one whose variation you want to understand or predict; plotted on the y-axis. Also called the dependent or outcome variable.

B05 · Scatterplots

A revision of previously issued financial statements to correct an error, so the earlier figures can no longer be relied on.

F03 · Cash flow and earnings quality

An intermediary that sells goods to final consumers.

M02 · Distribution channels and decisions

Cumulative net income kept in the business since it began, after dividends.

F01 · The accounting equation

The share of customers at the start of a period who are still customers at its end.

M01 · Customer value, satisfaction and lifetime value

Net income for a period divided by average total assets (closing total assets when there is no opening balance sheet): how much profit each dollar of resources produced. Abbreviated ROA.

F03 · Return on assets and equity

Net income less any preferred dividends for a period divided by average common shareholders’ equity: how much the business earned on each dollar of the owners’ book capital. Abbreviated ROE; not meaningful when equity is negative or tiny.

F03 · Return on assets and equity

Operating profit after tax (EBIT × (1 − tax rate)) divided by the capital provided by lenders and owners (interest-bearing debt plus equity, usually averaged): a return on the business’s operations that does not depend on how they are financed. Abbreviated ROIC; definitions vary in their treatment of cash and leases.

F03 · Return on assets and equity

An IFRS option (IAS 16) to carry a whole class of property, plant and equipment at fair value at the revaluation date, less later depreciation and impairment, with increases taken to other comprehensive income. Not permitted under US GAAP.

F02 · Long-lived assets

A preference inferred from what people actually chose or bought, as in sales records or a test market.

M04 · Insights and reporting

Increases in assets, or decreases in liabilities, from delivering goods or services to customers in the business’s ordinary activities. Revenue increases equity.

F01 · Accounts, terminology and classifications

Revenue is recognised when, or as, the business satisfies a performance obligation by transferring control of a promised good or service to the customer, at the amount it expects to be entitled to (ASC 606, IFRS 15).

F01 · Accrual versus cash accounting

An error in which the correct accounts and amount are used but the debit and credit are swapped.

F01 · The trial balance

A correlation in which the supposed effect actually causes the supposed cause, such as stores whose sales have fallen being the ones that cut their prices.

B05 · Correlation and causation

An optional entry made on the first day of a new period that is the exact opposite of an accrual adjustment made at the end of the previous period, so that the later payment or receipt can be recorded in the routine way.

F01 · The complete accounting cycle

A lessee’s right to use a leased asset for the lease term, recognised as an asset at the start of the lease, usually at the amount of the lease liability.

F03 · Solvency and leverage

Having a long tail of large values; the mean is usually above the median. Also called positively skewed.

B02 · Skewed data and transformations

In finance, the possibility that an outcome will differ from what is expected, for better or for worse.

F00 · What finance is: money, time and risk

Preferring a certain amount to a gamble with the same expected value. Most savers and investors are assumed to be risk averse.

F00 · What finance is: money, time and risk

The extra expected return that investors demand for bearing risk: the expected return on a risky investment minus the risk-free rate.

F00 · What finance is: money, time and risk

Switching to riskier projects after borrowing, which can raise the expected payoff to shareholders while lowering the expected payoff to lenders. Also called asset substitution.

F00 · Governance and the agency problem

The return on an investment whose payoff is certain, such as an insured short-term deposit or a short-term loan to a government that is almost sure to repay.

F00 · What finance is: money, time and risk

A web-based opt-in sample recruited through invitations placed on websites, such as pop-ups, banners and links, for a single survey or a panel.

M04 · Sampling methods

Return on ad spend: revenue attributed to a campaign ÷ the campaign’s ad spend. It ignores costs and whether the revenue was caused by the ads.

M02 · Measuring promotion and bringing the mix together

Rescaling a variable as (x − median) ÷ interquartile range, so that extreme values have little influence on the scale.

B02 · Normalisation and standardisation

A standard error for a regression coefficient that stays valid when the error variance differs between rows, estimated from each row’s own squared residual; HC3 is a common version.

B06 · Assumptions and diagnostics

A summary that a few extreme values can’t move far, such as the median, the interquartile range or the median absolute deviation.

B02 · Outliers and impossible values

A check or schedule that starts from an account’s opening balance, adds and subtracts the period’s movements and arrives at its closing balance, with each movement traced to another statement or to the ledger.

F02 · Linking the statements

A cause which, if removed, would prevent a problem from recurring. Many problems have several.

B01 · Problem-solving frameworks

A structured search for the underlying causes of a problem, rather than its symptoms, so that fixing them prevents it from recurring.

B01 · Problem-solving frameworks

Instructions or programmed rules (skip logic) that send each respondent only to the questions that apply to them, based on their earlier answers.

M04 · Questionnaire design

The multiplication of rows in a join when a key value appears more than once in the other table. Totals computed from the joined table are inflated.

B02 · Transforming and reshaping data

AAPOR’s Response Rate 1: complete interviews divided by all eligible cases and cases of unknown eligibility, I ÷ ((I + P) + (R + NC + O) + U).

M04 · Survey error

AAPOR’s Response Rate 2: complete and partial interviews divided by all eligible cases and cases of unknown eligibility, (I + P) ÷ ((I + P) + (R + NC + O) + U).

M04 · Survey error

A shortcut for doubling time: about 72 divided by the percentage rate per period. Close for rates between about 2% and 15%; exact near 7.85%.

F04 · Simple and compound interest

A reduction of the amount owed that a seller offers for prompt payment, for example 2% off if the invoice is paid within 10 days (2/10, n/30). Recorded in a contra-revenue account.

F02 · Revenue recognition

Short-term incentives to encourage buying or selling now, aimed at consumers (coupons, samples, price cuts) or at the trade (allowances, display payments).

M02 · The promotion mix and integrated marketing communications

A contra-revenue account for refunds and credits given to customers who return goods or accept a price reduction for unsatisfactory goods.

F02 · Revenue recognition

The part of a population that is actually observed or asked, used to learn about the whole.

B01 · Collecting data: sources, samples and bias

The set of all possible outcomes of an experiment, such as the 231 orders that a random draw could pick.

B04 · Probability

Systematic error that arises when some members of the population are less likely than others to be included in the sample.

B01 · Collecting data: sources, samples and bias

The distribution of a statistic, such as a sample mean or proportion, over all the samples of a given size that could be drawn from a population.

B04 · Sampling distributions

The chance difference between a sample’s result and the population’s, which arises because only part of the population was observed. It shrinks as the sample grows.

B01 · Collecting data: sources, samples and bias

The list or source from which a sample is actually drawn, such as a customer e-mail list. Anyone missing from the frame can’t be sampled.

B01 · Collecting data: sources, samples and bias

The thing a sampling frame lists and a design selects, such as a person, a household, a store or a cluster of people.

M04 · Sampling methods

Answering a survey question with mental short cuts instead of fully understanding it, recalling what is relevant and forming a judgement; it grows with the difficulty and length of a questionnaire (Krosnick and Presser).

M04 · Questionnaire design

In qualitative research, the point at which further interviews or groups add no new themes or codes.

M04 · Qualitative research

The condition that resources such as time, money, labour and materials are limited relative to what people want, so every use of a resource means giving up another.

F00 · Finance, accounting and economics

A chart with two value axes that plots each observation as a point at its x and y values, used to show the relationship between two numeric variables. Also called an XY chart.

B03 · Charts and conditional formatting

A plot of paired data with one point per unit, placed by its value of one variable on the x-axis and of the other on the y-axis, used to see how two numeric variables are related. Excel calls it a scatter chart.

B05 · Scatterplots

A grid of scatterplots showing every pair of a set of variables, one small plot per pair.

B05 · Scatterplots

One possible future, described by the values of the uncertain inputs (such as low, medium or high demand), often with a probability attached.

B01 · The four kinds of analytics

An Excel what-if tool that saves named sets of values for up to 32 changing cells, substitutes a chosen set into the sheet and summarises the scenarios’ results side by side.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

A short questionnaire used before a study to decide whether a person qualifies to take part, and in which group.

M04 · Qualitative research

A question at the start of a survey that decides whether a person is in the population the survey is about, and so whether they continue.

M04 · Questionnaire design

A regular pattern that repeats at the same time each year (or week, or day), such as gift buying in December.

B01 · Interpreting results: charts, comparisons and causes

The Securities and Exchange Commission: the US federal agency, founded in 1934, that protects investors, keeps securities markets fair, orderly and efficient, and facilitates capital formation, and has legal authority over the financial reporting of public companies.

F00 · Market participants

A second value axis, usually on the right of a chart, with its own scale for one or more series.

B03 · Charts and conditional formatting

Data that already exists because it was collected for another purpose, such as transaction records or official statistics, reused for a new question.

B01 · Types of data

The market in which existing securities are resold between investors; the issuer receives none of the money.

F00 · Financial markets

Finding, judging and using data that already exists, collected by someone else or by the business itself for another purpose. Also called desk research.

M04 · Secondary research

A financial asset that can be bought and sold, such as a share or a bond.

F00 · Financial markets

How worth serving a segment is for any firm that could serve it well: its size, growth and profitability, how well rivals already serve it, and how easily it can be reached.

M05 · Evaluating segments

The mean of a segment’s members on every segmentation variable; also called the centroid. In k-means each observation belongs to the segment with the nearest centre.

M05 · Cluster analysis

How well a segment matches a particular company’s objectives, resources and strengths: whether the company can win the segment and wants to.

M05 · Evaluating segments

A variable on which segments are formed, such as region, age, the benefits sought, usage rate or attitude. Variables used only to describe or reach segments once formed are descriptor variables.

M05 · Why segment?

An internal control that divides the authorisation, recording and custody of assets for a transaction among different people, so that no one person can both commit and conceal an error or a theft.

F01 · The complete accounting cycle

Systematic error that arises when the rows in the data were chosen by a process related to the variables being studied, creating or distorting associations.

B05 · Correlation and causation

The tendency to notice only a small share of the messages and stimuli around us, mostly those related to a current need or interest.

M01 · What influences buying

Placing a product in more than one but fewer than all of the outlets that would stock it, chosen for their fit with the product.

M02 · Distribution channels and decisions

A sample made up of the people who choose to take part, such as everyone who answers a link posted online. Also called a voluntary-response sample; people with strong views tend to be over-represented.

B01 · Collecting data: sources, samples and bias

The belief that customers won’t buy enough unless persuaded, so a business should sell and promote hard what it has already decided to make.

M01 · Market orientation: putting customers at the centre

A rating format with two opposite adjectives at the ends of a row of points, usually seven, on which respondents place a brand, product or idea.

M04 · Questionnaire design

Data that labels its parts, such as the named fields of a JSON record or an e-mail’s headers, without forcing every record into the same columns.

B01 · Types of data

The share of actual positive cases that a classification rule flags as positive, TP ÷ (TP + FN); also called recall or the true positive rate.

B06 · Logistic regression

Measuring how much a model’s output changes when an input changes, usually one input at a time, to find the assumptions that matter most.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

The situation in most large companies, in which the shareholders who own the company hire professional managers to run it.

F00 · Governance and the agency problem

A date stored as a count of days from a fixed starting point, as spreadsheets do. In Excel’s 1900 date system, 1 January 1900 is serial number 1.

B02 · Incorrect data types and inconsistent dates

SAM: the part of the total addressable market that a business’s offer and routes to market could serve, such as the sales in the channels it plans to use. Definitions vary between sources.

M04 · Market sizing

SOM: the part of the serviceable available market that a business can realistically win in a stated period, given its resources and competitors. An estimate, not a goal.

M04 · Market sizing

In a linear programme without integer constraints, the change in the optimal objective per unit increase in a constraint’s limit, valid over a stated range.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

A segment’s total spend divided by the total spend of everyone in the base; compared with its share of people, it shows whether the segment spends more or less per head than average.

M05 · Profiling segments

The view that managers, as agents of the owners, should run the company to maximise its value for shareholders, within the law and ethical custom.

F00 · Governance and the agency problem

Negative shareholders’ equity: total liabilities exceed total assets, usually because of accumulated losses or because distributions to owners have exceeded earnings.

F03 · Solvency and leverage

A store check focused on prices: recording the shelf price of defined products in a set of stores over a short period, with promotions marked.

M04 · Competitor research

A consumer product bought less often, after comparing quality, price and style across a few outlets.

M02 · Product decisions

Selling borrowed securities in the hope of buying them back later at a lower price and returning them.

F00 · Market participants

Inventory lost to theft, damage, spoilage or recording error, found when a physical count is lower than the records.

F02 · Inventory and cost of goods sold

The probability of rejecting a true null hypothesis that a test is designed to allow, chosen before the data are seen; written α, often 0.05.

B04 · Hypothesis testing

For one observation, (b − a) ÷ max(a, b), where a is its average distance to the other members of its cluster and b its average distance to the nearest other cluster; from −1 to 1, near 1 when it sits well inside its cluster (Rousseeuw, 1987). The mean silhouette summarises a solution.

M05 · Cluster analysis

Interest calculated on the original principal only, so it is the same every period: principal × rate × time.

F00 · Interest and inflation

A sample chosen so that every group of the same size in the frame is equally likely to be selected, for example by drawing customer numbers at random.

B01 · Collecting data: sources, samples and bias

A relationship that holds within each of several groups but disappears or reverses when the groups are combined, usually because the groups’ sizes or mix differ.

B01 · Interpreting results: charts, comparisons and causes

An income statement that adds up all revenues and all expenses and subtracts once to give net income, with no intermediate subtotals.

F02 · The multi-step income statement

A structured review of a business’s current position (its customers, competitors, wider environment and its own strengths and weaknesses) used as the starting point of a marketing plan.

M01 · Situation analysis

A measure of the asymmetry of a distribution: positive for a long right tail, negative for a long left tail, near 0 for symmetric data.

B02 · Skewed data and transformations

The unused part of a constraint at a solution: its limit minus what the solution uses.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

An Excel panel of buttons that filters a table or PivotTable and shows which items are selected; one slicer can control several PivotTables that share the same data source.

B03 · PivotTables

An error in which the decimal point is misplaced, so every digit shifts, such as $350 written as $35. When it makes the totals differ, the difference is a multiple of 9.

F01 · The trial balance

In a fitted line ŷ = b₀ + b₁x, the coefficient b₁: the change in the fitted value for each one-unit increase in x, in y’s units per unit of x.

B06 · The least-squares line

A payment from a supplier to a retailer to have a new product placed on its shelves or in its warehouse; also called a slotting allowance. Listing fees are similar charges for being stocked.

M02 · Distribution channels and decisions

A set of small charts of the same kind, one per group or period, drawn on the same axes so that they can be compared at a glance.

B05 · Scatterplots

An objective that is Specific, Measurable, Achievable, Relevant and Time-bound. Sources expand some letters differently: Doran’s 1981 original used Assignable, Realistic and Time-related, and some guides use Attainable for A.

B01 · Business questions and measurable objectives

A correction for back-transforming predictions from a model of ln y: multiply e to the predicted log by the average of e to the residuals, to estimate the mean of y rather than its median.

B06 · Transformations and influence

A non-probability sample in which participants recruit further participants from among their contacts, used for groups that have no list.

M04 · Sampling methods

A relatively lasting division of a society whose members have similar income, occupation and education, and often similar values.

M01 · What influences buying

Measurement bias that arises when respondents give the answer that makes them look good rather than the true one, such as overstating recycling or understating drinking. It is stronger when an interviewer is present.

M04 · Questionnaire design

Tracking what people say in public online posts, reviews and forums about a brand, product or topic, usually with software that counts mentions and classifies their tone.

M04 · Secondary research

The belief that a business should satisfy customers in ways that also protect the long-term interests of society and the environment.

M01 · Market orientation: putting customers at the centre

The ability to meet all obligations over the long run, because assets are worth more than everything owed.

F00 · Capital and liquidity

An Excel add-in that chooses the values of several decision-variable cells to maximise, minimise or set the value of an objective cell, subject to constraints.

B03 · What-if analysis: data tables, Goal Seek, scenarios and Solver

The original record of a business event, such as an invoice, receipt, bank statement, contract or payroll record, that provides the evidence for a journal entry. Also called an original source.

F01 · Journal entries

A tiny chart inside a single worksheet cell that shows the trend of a row or column of numbers.

B03 · Charts and conditional formatting

Pearson’s correlation coefficient calculated on the ranks of two variables (ties given average ranks), written r_s or Spearman’s ρ. It measures the strength and direction of a monotonic association, from −1 to +1.

B05 · Rank correlation

A consumer product with unique features or a brand identity for which buyers make a special effort and compare little.

M02 · Product decisions

The share of actual negative cases that a classification rule correctly classes as negative, TN ÷ (TN + FP).

B06 · Logistic regression

A survey respondent who completes the questionnaire much faster than anyone could read it attentively, judged against a time threshold set in advance; a sign of answering with too little effort.

M04 · Analysing survey data

A group’s total spend divided by the number of people in it: the mean spend.

M05 · Profiling segments

What a formula that returns several values does in Excel for Microsoft 365, Excel 2021 and Excel 2024: the results fill the neighbouring cells, the spill range, starting from the formula’s cell.

B03 · Lookups: VLOOKUP, INDEX and MATCH, XLOOKUP

A correlation between two variables that arises from something other than one affecting the other, such as a confounder, a shared trend, selection or chance.

B05 · Correlation and causation

Replacing each value x with √x; a milder correction for right skew that handles zeros.

B02 · Skewed data and transformations

The sum of the squared differences between two observations on every variable, Σ(x_j − y_j)²; the square of the straight-line distance.

M05 · Cluster analysis

A person or group who affects or is affected by a decision: those who decide, those who supply the data, those who carry out the result and those the result affects.

B01 · Business questions and measurable objectives

The view that a company should be run for the benefit of all who have a stake in it (customers, employees, suppliers, communities and shareholders).

F00 · Governance and the agency problem

The price at which a business would sell a promised good or service separately to a customer. Used to allocate a contract’s transaction price among its performance obligations.

F02 · Revenue recognition

A measure of spread: roughly the typical distance of values from their mean, calculated as the square root of the average squared distance (dividing by n − 1 for a sample).

B01 · Summarising data: changes, averages and spread

The standard deviation of a statistic’s sampling distribution: how far the statistic typically lies from the parameter it estimates. For a sample mean it is σ ÷ √n, estimated by s ÷ √n.

B04 · Sampling distributions

The sample standard deviation divided by the square root of the number of values, s ÷ √n: how much the mean would vary from one sample of that size to another.

B03 · Descriptive statistics and regression in Excel

The typical size of a residual, √(residual sum of squares ÷ (n − k − 1)), in the units of y. The Standard Error line in Excel’s regression output.

B03 · Descriptive statistics and regression in Excel

The estimated standard deviation of a regression slope’s sampling distribution, s ÷ √Sxx in simple regression: how far the slope from one sample typically lies from the population slope.

B06 · Inference for coefficients

The normal distribution with mean 0 and standard deviation 1, which the z-scores of any normal variable follow. Excel’s NORM.S.DIST and NORM.S.INV use it.

B04 · The normal distribution

Rescaling a variable as (x − mean) ÷ standard deviation, so the training data have mean 0 and standard deviation 1. The result is a z-score.

B02 · Normalisation and standardisation

A slope rescaled to standard-deviation units, b_j × s(x_j) ÷ s(y): the change in y, in SDs, per SD of the predictor in the sample.

B06 · Multiple regression

What people say they would choose or do, collected in a survey or interview; for a purchase it usually overstates what they go on to do.

M04 · Insights and reporting

The statement of cash received and paid during a period, classified as operating, investing or financing activities, reconciling beginning to ending cash.

F01 · Financial statements from the adjusted trial balance

The statement showing how each component of equity (such as common stock and retained earnings) changed during a period. Often called the statement of stockholders’ equity in the United States.

F01 · Financial statements from the adjusted trial balance

A simpler statement, common in introductory texts, showing beginning retained earnings plus net income minus dividends equals ending retained earnings.

F01 · Financial statements from the adjusted trial balance

A number calculated from a sample, such as its mean x̄, standard deviation s or proportion p̂, often used to estimate a parameter. It varies from one sample to another.

B04 · Describing distributions

Describes a result whose p-value is at or below the chosen significance level, so it is unlikely under the null hypothesis. It says nothing about whether the effect is large or important.

B04 · Hypothesis testing

The rate of tax set by law, such as the 21% US federal corporate income tax rate.

F02 · The multi-step income statement

Choosing a regression’s predictors automatically by adding or removing them one at a time according to p-values or an information criterion. Its p-values, intervals and R² are biased in the model’s favour.

B06 · Multicollinearity and model choice

Rights to buy a company’s shares at a fixed price (the exercise price) during a set period; valuable to the holder only if the share price rises above that price.

F00 · Governance and the agency problem

A visit to a set of outlets to record what is actually on the shelf: products, prices, space, promotions and out-of-stocks.

M04 · Competitor research

Segmentation, targeting and positioning: the process of dividing a market into segments, choosing the segment or segments to serve, and deciding the position to hold with each and the marketing mix that delivers it.

M05 · Why segment?

A buying situation in which an organisation reorders something it has bought before, from the same supplier and on the same terms, with little search or deliberation.

M01 · How organisations buy

A depreciation method that charges the same amount in every full period: (cost − residual value) ÷ useful life.

F01 · Adjusting entries

Giving the same answer to every item in a grid of rating questions; strong evidence of inattention when the grid contains reversed items.

M04 · Analysing survey data

An estimate for the whole population built from stratum results weighted by each stratum’s share of the population, such as p̂ = Σ (N_h ÷ N) × p̂_h for a proportion.

M04 · Sampling methods

A sample drawn by dividing the population into groups (strata), such as regions, and drawing a random sample within each, usually in proportion to the group’s size.

B04 · Sampling distributions

Data organised in a fixed layout of rows and columns in which every record has the same fields, such as an order export or a database table.

B01 · Types of data

A reference to part of an Excel table by its table and column names, such as Orders[order_total], or [@quantity] for the value in the formula’s own row.

B03 · Excel tables and cleaning data

Porter’s term for a firm that pursues low cost and differentiation at once without achieving either, and so has no clear advantage.

M01 · Competitive advantage

A residual divided by the standard deviation it should have given its leverage, so that residuals can be compared on one scale; the externally studentized version estimates that standard deviation without the row itself.

B06 · Transformations and influence

A basic and distinctive mode of expression, such as casual or formal dress, that can last for generations, going in and out of favour.

M02 · The product life cycle

A separately named offer under a parent brand, used to serve a segment or carry a position the parent brand can’t credibly hold.

M05 · Differentiation and repositioning

A group within a culture whose members share values or experiences of their own, such as an ethnic or religious group, a region or a community of enthusiasts.

M01 · What influences buying

A separate ledger giving the detail behind one general-ledger account, such as one account for each customer or each supplier.

F01 · Posting to the general ledger

A product or service that meets the same customer need in a different way, such as a leased office coffee machine instead of a coffee caterer.

M01 · Situation analysis

Selling under the guise of research: contacting people as if for research in order to sell to them or to collect sales leads. Professional research codes forbid it.

M04 · The research process

The total of the squared deviations of values from their mean, Σ(x − x̄)²; Excel’s DEVSQ. Dividing it by n − 1 gives the sample variance.

B04 · Describing distributions

A table of aggregates for each combination of categories, such as order value by month and channel, often built with one formula filled across and down.

B03 · Conditional sums, counts and averages

Money already spent that cannot be recovered whatever is decided now. It is not an incremental cash flow and should be ignored.

F00 · Six principles behind financial decisions

Letting money already spent influence a decision, typically by continuing a failing project so that past spending is not “wasted”.

F00 · Six principles behind financial decisions

The way questions reach respondents and answers come back, such as a web questionnaire, a telephone interview or a face-to-face interview. The mode can change the answers.

M04 · Questionnaire design

The number of population members a respondent stands for in an estimate, used so that weighted respondents reproduce the population’s make-up.

M04 · Survey error

Systematic error from studying only the people or things that passed some filter, such as current customers, while those that dropped out are invisible.

B01 · Collecting data: sources, samples and bias

The rule that decides which record in a group of duplicates is kept, or how their fields are combined: for example first, latest update, most complete or merge.

B02 · Duplicate records

An advantage that rivals cannot easily copy or substitute, so that it lasts after they have tried.

M01 · Competitive advantage

A summary of a business’s situation in four lists: internal strengths and weaknesses, and external opportunities and threats.

M01 · Situation analysis

Data collected by a research firm once and sold by subscription to many clients, such as retail sales measured at store checkouts or household purchase panels.

M04 · Secondary research

Risk that affects nearly all investments at once, such as a recession or a change in interest rates, and cannot be removed by diversification. Also called market or non-diversifiable risk.

F00 · Six principles behind financial decisions

A sample taken by choosing a random starting point in an ordered list and then every kth member after it.

B04 · Sampling distributions

The symmetric, bell-shaped distribution of (x̄ − μ) ÷ (s ÷ √n) for samples from a normal population, with heavier tails than the standard normal; its shape depends on its degrees of freedom, n − 1, and approaches the standard normal as they grow. Also called Student’s t.

B04 · Confidence intervals

A sketch of an account shaped like a letter T, with debits to the left of the vertical line and credits to the right. Used for teaching and analysis; ledgers kept in practice use columns.

F01 · Debits, credits and normal balances

A short catchphrase, used with customers, that sums up the essence of an offer or brand.

M05 · Positioning statements

Replacing each category with the average value of the target variable for that category in the training data, ideally smoothed and computed out-of-fold.

B02 · Encoding categorical variables

The group of customers a business chooses to serve with a particular offer.

M02 · The marketing mix and customer value

The whole group a survey’s conclusions are meant to describe, defined by the research question, such as all of a business’s customers or all ready-to-drink coffee buyers in a city.

M04 · Sampling methods

Setting the price that earns a chosen rate of return on the capital invested, at a forecast volume: unit cost + (target return × capital invested) ÷ forecast units.

M02 · Pricing approaches

A company’s choice of how many segments to serve and how differently to treat them: undifferentiated, differentiated or concentrated marketing, or micromarketing.

M05 · Targeting strategies

The branch of accounting that applies tax law to work out a business’s taxable income and the tax it owes.

F01 · What accounting is and why businesses need it

Net income divided by income before tax: the share of pretax profit the owners keep after income tax (one minus the effective tax rate). A factor of the five-step DuPont decomposition; higher is better.

F03 · DuPont analysis

An account that collects one period’s activity and is closed to retained earnings at the end of the period: revenue, expense and dividends accounts. Also called a nominal account.

F01 · Accounts, terminology and classifications

The value, at the end of an explicit forecast period, of all the cash flows expected after it, often estimated as a growing perpetuity: CF(N+1) ÷ (r − g).

F04 · Perpetuities and growth

Launching a product or marketing plan in a limited area to measure results before a full roll-out.

M02 · Measuring promotion and bringing the mix together

A chi-square test of whether two categorical variables are related, comparing a contingency table’s counts with the counts expected if they were independent; (r − 1)(c − 1) degrees of freedom.

B04 · Proportions and chi-square tests

Data held back from all fitting and used only to estimate how a model will perform on data it has not seen.

B02 · Normalisation and standardisation

A number calculated from the sample that measures how far the data lie from what the null hypothesis predicts, usually in standard errors: z, t, χ² or F.

B04 · Hypothesis testing

The consistency of a measure over time, assessed by giving the same measure to the same people twice, a short time apart, and correlating the two sets of scores.

M04 · Questionnaire design

A piece of text in a cell or a formula, whose characters are numbered from 1; in a formula it is written in double quotation marks.

B03 · Functions, logic, text and dates

A method for finding, reviewing and reporting patterns of meaning (themes) in qualitative data, set out by Braun and Clarke (2006) in six phases.

M04 · Qualitative research

A financial model in which the income statement, balance sheet and statement of cash flows are linked, so that a change in one assumption flows through all three and the forecast balance sheet still balances.

F02 · Linking the statements

A relationship in which y barely changes with x up to a certain value of x and changes markedly beyond it.

B05 · Curves, thresholds and restricted ranges

The weight a factor would need, with every other weight unchanged, for a weighted scorecard to rank two options equal; beyond it the order changes.

M05 · Evaluating segments

A layout in which each variable forms a column, each observation forms a row and each type of observational unit forms a table (Wickham, 2014).

B02 · Datasets: rows, columns, records and variables

Confirming that a figure shown in one statement or note agrees with the same figure wherever else it appears and with the ledger.

F02 · Linking the statements

The period a question covers and the length of the periods it compares, such as calendar months, or four weeks either side of a change.

B01 · Business questions and measurable objectives

The assumption that a business’s life can be divided into periods, such as months, quarters and years, for which reports are prepared.

F01 · What accounting is and why businesses need it

The principle that a dollar available today is worth more than a dollar available later, because today’s dollar can earn a return in the meantime.

F00 · What finance is: money, time and risk

Data on one unit at many points in time, kept in time order, such as a shop’s visits month by month.

B01 · Types of data

An Excel filter for the date fields of PivotTables: a slider that selects years, quarters, months or days.

B03 · Dashboards that answer questions

Whether data represents reality at the point in time it is needed and is up to date.

B01 · Data quality: is the data fit for the question?

The percentage of respondents choosing the most favourable answer on a rating or purchase-intent scale, such as “definitely would buy”.

M04 · Analysing survey data

Estimating a market, or a business’s sales, by starting from the whole category and narrowing it with shares: the channels or segments served, then the share the business expects to win.

M04 · Market sizing

The percentage of respondents choosing either of the two most favourable answers on a scale, such as “definitely” or “probably would buy”.

M04 · Analysing survey data

TAM: the whole demand for a product category in a defined place and period, whoever supplies it, measured either as what the category sells now or, as a ceiling, as every potential customer buying at the offer’s price. Definitions vary between sources; some describe it as the revenue available at a 100% market share.

M04 · Market sizing

Everything an organisation pays to acquire, use, maintain and eventually replace or dispose of a product over its life, not just the purchase price.

M01 · How organisations buy

An optional last row of an Excel table that summarises its columns, by default with SUBTOTAL so that rows hidden by a filter are left out.

B03 · Excel tables and cleaning data

SST = Σ(y − ȳ)²: the variation of the response around its mean, before any explanatory variable is used. Excel’s DEVSQ.

B06 · Residuals and R²

The combined error in a survey estimate from every source (coverage, sampling, non-response, adjustment, measurement and processing), considered together when designing and judging a survey.

M04 · Survey error

Any point at which a customer meets a brand, such as an advertisement, a search result, a review, a website, a salesperson or a delivery message.

M01 · How consumers make buying decisions

Heinz Weihrich’s (1982) way of turning a SWOT into strategic options by pairing its boxes: strengths with opportunities (SO) or threats (ST), and weaknesses with opportunities (WO) or threats (WT).

M01 · Situation analysis

A survey repeated at intervals with the same questions, population and sampling design, so that changes over time can be told apart from differences in method.

M05 · Differentiation and repositioning

An organisation that represents the businesses in an industry; many publish members’ sales estimates and market reports.

M04 · Secondary research

The share of the final selling price kept by the intermediaries, usually quoted as a percentage of that price.

M02 · Distribution channels and decisions

A sales promotion aimed at intermediaries, such as funding for a retailer’s temporary price cut or a payment for a display.

M02 · The promotion mix and integrated marketing communications

Business information that has value because it is not generally known and that its holder takes reasonable steps to keep secret; acquiring it by improper means, such as misrepresentation, bribery or inducing a breach of confidence, is misappropriation in US law, and EU and UK law call it unlawful acquisition.

M04 · Competitor research

The part of the data used to fit a model and every data-dependent preparation step, such as scaling parameters and encodings.

B02 · Normalisation and standardisation

Working out from a source document which accounts a transaction affects, whether each increases or decreases, by how much and on which side, and checking that debits equal credits.

F01 · Journal entries

The amount a business expects to be entitled to in exchange for the goods or services promised in a contract, excluding amounts collected for third parties such as some sales taxes.

F02 · Revenue recognition

Data recorded as a by-product of doing business, such as orders, payments, refunds and bookings.

B01 · Collecting data: sources, samples and bias

An error in which two digits of an amount are swapped, such as 1,600 written as 1,060. When it makes the totals differ, the difference is a multiple of 9.

F01 · The trial balance

US Treasury securities whose principal is adjusted with the Consumer Price Index and which pay a fixed rate of interest on the adjusted principal every six months; at maturity the holder receives the greater of the adjusted and the original principal. Often shortened to TIPS.

F04 · Inflation and real returns

A corporation’s own shares that it has issued and later bought back and holds. Shown as a deduction from equity; treasury shares have no votes and receive no dividends.

F02 · The balance sheet and equity

A diagram of events in sequence whose branches carry probabilities, conditional on the branches before them; multiplying along a path gives its joint probability.

B04 · Probability

A line’s amount in a year divided by its amount in a chosen base year, times 100, so the base year reads 100. Also called a base-year index.

F03 · Horizontal analysis

A list of every general-ledger account with a balance at a given date, each balance in its debit or credit column, with both columns totalled to check that they agree.

F01 · The trial balance

Checking a finding or an estimate against evidence from other sources or methods. Agreement raises confidence; disagreement points to differences in definitions, coverage, timing or method that must be explained.

M04 · Secondary research

The mean of the values left after a fixed share is removed from each end of the sorted data. Excel’s TRIMMEAN(array, percent) removes percent of the values in total (rounded down to an even number of values), half from each end.

B04 · Describing distributions

A value axis that starts above zero. It distorts bar lengths, and so the comparisons a bar chart makes.

B03 · Charts and conditional formatting

Limits at Q1 − 1.5 × IQR and Q3 + 1.5 × IQR; values outside them are flagged as potential outliers. Outer fences use 3 × IQR.