Skip to content

Appendix B: Acronym Index

Complete table of all acronyms and abbreviations across all 18 courses.

Acronym Full Term Plain English Course Confused With
A/P Accounts Payable Money you owe suppliers for goods or services already received Operational Finance A/R
A/R Accounts Receivable Money customers owe you for goods or services already delivered Operational Finance A/P
ABC Activity-Based Costing Allocating overhead costs based on the actual activities that cause them, not just volume Managerial Accounting
ABP Analysis of Business Problems IESE's structured six-step framework for solving complex, unstructured managerial decisions Analysis of Business Problems
AD Aggregate Demand Total spending in the economy at each price level Global Economics AS
AI Artificial Intelligence Computer systems that perform tasks normally requiring human intelligence Competitive Strategy
AOCI Accumulated Other Comprehensive Income Running total of unrealized gains and losses that bypass the income statement, stored in equity Financial Accounting OCI
ARPU Average Revenue Per User How much revenue one customer generates per period on average Marketing Management
AS Aggregate Supply Total production in the economy at each price level Global Economics AD
AUC Area Under the Curve Single number (0 to 1) measuring how well a classification model separates positives from negatives Business Analytics
B2B Business-to-Business Commerce where both buyer and seller are companies, not individual consumers Marketing Planning and Implementation B2C
B2C Business-to-Consumer Commerce where a company sells directly to individual consumers Marketing Management B2B
BAV BrandAsset Valuator Young & Rubicam's framework rating brands on differentiation, relevance, esteem, and knowledge Marketing Planning and Implementation
BEQ Break-Even Quantity Number of units you must sell to cover all fixed costs exactly -- zero profit Marketing Management
BML Build-Measure-Learn The core feedback loop of the lean startup: build an MVP, measure results, learn, repeat Entrepreneurship 2
BMC Business Model Canvas One-page visual map of the nine building blocks of a business model Entrepreneurship 1
BOP Balance of Payments Record of all economic transactions between a country and the rest of the world Global Economics
BPR Business Process Reengineering Radically redesigning business processes from scratch rather than making incremental improvements Operations Strategy
CA Current Account Balance of trade in goods and services plus net transfers and factor income between countries Global Economics FA (Financial Account)
CAC Customer Acquisition Cost Total cost to get one new customer, including all marketing and sales expenses Marketing Management
CAPM Capital Asset Pricing Model Formula that estimates the return shareholders require based on risk-free rate, beta, and market premium Corporate Finance WACC
CCC Cash Conversion Cycle Days between paying your suppliers and collecting cash from customers (DSO + DIO - DPO) Operational Finance
CE Certainty Equivalent The guaranteed amount you would accept instead of taking a risky gamble Decision Analysis EMV
CFI Cash Flow from Investing Activities Cash spent on or received from buying and selling long-term assets and investments Financial Accounting CFO, CFF
CFF Cash Flow from Financing Activities Cash from issuing stock or borrowing, minus dividends and loan repayments Financial Accounting CFO, CFI
CFO Cash Flow from Operating Activities Cash actually generated (or consumed) by the core business operations Financial Accounting CFI, CFF
CLV Customer Lifetime Value Total profit a single customer generates over the entire duration of their relationship with you Marketing Management LTV (same thing)
CM Contribution Margin Revenue minus variable costs -- the portion of each sale available to cover fixed costs Managerial Accounting Gross Margin
CML Capital Market Line Line on a graph showing the best risk-return combinations when you mix a risk-free asset with the market portfolio Corporate Finance SML
COGS Cost of Goods Sold Direct costs of producing or purchasing the products you sold during the period Financial Accounting
COO Chief Operating Officer Senior executive responsible for day-to-day operations of the company Operations Strategy
CPA Cost Per Acquisition What you pay in advertising to acquire one customer or lead Marketing Planning and Implementation CAC
CPC Cost Per Click What you pay each time someone clicks on your online ad Marketing Planning and Implementation CPM
CPL Cost Per Lead What you pay in advertising to generate one qualified sales lead Marketing Planning and Implementation CPA
CPM Cost Per Thousand (Mille) Impressions Cost to show your ad 1,000 times -- the standard pricing for display advertising Marketing Planning and Implementation CPC
CRM Customer Relationship Management Software and strategy for managing interactions with current and potential customers Competitive Strategy
CS Consumer Surplus The extra value buyers get because the market price is lower than what they would have paid Global Economics PS
CSR Corporate Social Responsibility Voluntary actions a company takes to address social and environmental concerns beyond legal requirements Business Ethics CSV
CSV Creating Shared Value Finding business opportunities that simultaneously create profit and solve societal problems Competitive Strategy CSR
CT Cycle Time Average time between one completed unit and the next (inverse of throughput) Operations Management TT
CTR Click-Through Rate Percentage of people who see your ad and actually click on it Marketing Planning and Implementation
D&A Depreciation and Amortization Non-cash charges that spread the cost of long-term assets over their useful lives Operational Finance
DCF Discounted Cash Flow Valuation method that estimates what future cash flows are worth today by discounting them back Corporate Finance
DDDM Data-Driven Decision-Making Using analytics and data alongside human judgment to make business decisions Business Analytics
DIO Days Inventory Outstanding Average number of days inventory sits in the warehouse before being sold Operational Finance DSO, DPO
DL Deadweight Loss Value destroyed when taxes or regulations prevent trades that would have benefited both buyer and seller Global Economics
DMP Decision-Making Process The sequence of stages a buyer moves through: pre-purchase, purchase, and post-purchase Marketing Management DMU
DMU Decision-Making Unit All the people who influence or participate in a purchase decision Marketing Management DMP
DPO Days Payable Outstanding Average number of days before you pay your suppliers Operational Finance DSO, DIO
DSO Days Sales Outstanding Average number of days before customers pay you Operational Finance DPO, DIO
DTA Deferred Tax Asset Future tax savings because you paid more tax now than the books required Financial Accounting DTL
DTC Direct-to-Consumer Selling directly to end customers without intermediaries like wholesalers or retailers Marketing Planning and Implementation
DTL Deferred Tax Liability Future tax bill because you paid less tax now than the books required Financial Accounting DTA
DV Dependent Variable The outcome you are trying to predict or explain in a statistical model Business Analytics IV
EBIT Earnings Before Interest and Taxes Operating profit -- how much the business earns before financing costs and taxes Operational Finance EBITDA
EBITDA Earnings Before Interest, Taxes, Depreciation, and Amortization Rough proxy for operating cash flow; adds back non-cash charges to EBIT Operational Finance EBIT
ECB European Central Bank The central bank that sets monetary policy for all countries using the euro Global Economics
ECF Equity Cash Flow Cash available to shareholders after all expenses, taxes, and debt payments Corporate Finance FCF
ECTS European Credit Transfer and Accumulation System Standardized credit system used in European higher education to measure coursework Entrepreneurship 2
EDLP Everyday Low Pricing Retail pricing strategy of keeping prices consistently low rather than running frequent promotions Operations Strategy
EMV Expected Monetary Value Probability-weighted average of all possible dollar outcomes of a decision Decision Analysis CE
EOQ Economic Order Quantity The order size that minimizes total ordering plus holding costs for inventory Operations Management
EPS Earnings Per Share Net income divided by the number of shares outstanding -- the most watched metric by analysts Financial Accounting
ESG Environmental, Social, and Governance Framework for measuring a company's impact on the environment, society, and corporate governance Business Ethics CSR
EU Expected Utility Probability-weighted average of the personal satisfaction from all possible outcomes Decision Analysis EMV
EV Enterprise Value Total value of a company's operations: equity value plus net debt Corporate Finance
EV/EBITDA Enterprise Value to EBITDA Valuation multiple comparing a company's total value to its operating cash flow proxy Corporate Finance P/E
EVA Economic Value Added Operating profit minus a charge for all capital used; measures whether the business creates or destroys value Managerial Accounting RI
EVC Economic Value to the Customer Maximum price a rational customer would pay, equal to the reference price plus life cycle savings Marketing Management WTP
EVII Expected Value of Imperfect Information How much a real-world (flawed) information source is worth before making a decision Decision Analysis EVPI
EVPI Expected Value of Perfect Information Maximum you should ever pay for information, assuming it is 100% accurate Decision Analysis EVII
FA (Fin) Financial Account Net flow of investment capital between a country and the rest of the world Global Economics CA
FA (Ops) Fixed Assets Long-term productive assets: property, plant, equipment, and intangibles Operational Finance NFO
FCF Free Cash Flow Cash the business generates after paying for operations and capital expenditures, available to all investors Corporate Finance ECF
FG Finished Goods Completed products sitting in inventory, ready to be sold Financial Accounting RM, WIP
FIFO First In, First Out Inventory method that assumes the oldest items are sold first, showing higher profits when prices rise Financial Accounting LIFO, WAC
FN False Negative A case the model incorrectly predicted as negative when it was actually positive -- a missed target Business Analytics FP
FOR Frame of Reference The product category or set of competitors against which a brand positions itself Marketing Management
FP False Positive A case the model incorrectly predicted as positive when it was actually negative -- a false alarm Business Analytics FN
FVOCI Fair Value Through Other Comprehensive Income Accounting method where asset value changes go to equity (OCI) instead of the income statement Financial Accounting FVTPL
FVTPL Fair Value Through Profit or Loss Accounting method where asset value changes flow directly through the income statement Financial Accounting FVOCI
FX Foreign Exchange The market where currencies are bought and sold Global Economics
GAAP Generally Accepted Accounting Principles US accounting standards governing how companies prepare financial statements Financial Accounting IFRS
GDP Gross Domestic Product Total market value of all final goods and services produced in an economy over a period Global Economics
GMROI Gross Margin Return on Inventory Gross margin earned divided by average inventory invested -- measures inventory productivity Operations Strategy
GRP Gross Rating Points Measure of total advertising exposure: reach times frequency Marketing Planning and Implementation
IFRS International Financial Reporting Standards Global accounting standards used in most countries outside the US Financial Accounting GAAP (US)
IP Intellectual Property Legal protections for creations of the mind: patents, trademarks, copyrights, trade secrets Operations Strategy
IPO Initial Public Offering The first time a company sells shares of stock to the public Corporate Finance SEO (Seasoned Equity Offering)
IRR Internal Rate of Return The discount rate that makes a project's NPV exactly zero -- represents the project's annualized return Corporate Finance NPV
IV Independent Variable A predictor or input variable in a statistical model Business Analytics DV
JIT Just-in-Time Manufacturing approach of producing only what is needed, when it is needed, to minimize inventory Operations Strategy
JTBD Jobs-to-Be-Done Framework that defines customer needs by the progress they are trying to make, not the products they buy Entrepreneurship 2
KPI Key Performance Indicator A measurable value that tracks how effectively an objective is being achieved Business Analytics
LBO Leveraged Buyout Acquiring a company using mostly borrowed money, where the target's own cash flows service the debt Corporate Finance
LIFO Last In, First Out Inventory method that assumes the newest items are sold first, lowering profits and taxes when prices rise; prohibited under IFRS Financial Accounting FIFO, WAC
LLM Large Language Model AI system trained on massive text data to generate and understand human language Competitive Strategy
LOCOM Lower of Cost or Market Accounting rule requiring inventory to be written down if market value falls below cost Financial Accounting NRV
LRAS Long-Run Aggregate Supply Vertical line at an economy's maximum sustainable output, unaffected by the price level Global Economics SRAS
LT Debt Long-Term Debt Borrowings with maturity greater than 12 months Operational Finance
LTV Lifetime Value Total profit a customer generates over their entire relationship (same as CLV) Entrepreneurship 1 CLV (same thing)
MBC Management by Competences Managing by evaluating both results (the whats) and behaviors and skills (the hows) Leadership MBO
MBO Management by Objectives Managing by evaluating only results and target achievement Leadership MBC
ML Machine Learning Subset of AI where algorithms learn patterns from data without being explicitly programmed Operations Strategy AI
MM Modigliani-Miller Theory that in perfect markets, how a company finances itself does not affect its total value Corporate Finance
MOIC Multiple on Invested Capital Total cash returned divided by total cash invested -- a 3x MOIC means you tripled your money Corporate Finance IRR
MRP Material Requirements Planning System that calculates what materials are needed, how many, and when, based on production schedules Operations Management
MVP Minimum Viable Product The smallest experiment you can build to test your riskiest business assumption and learn from it Entrepreneurship 1
NBV Net Book Value An asset's original cost minus all depreciation and impairment charged so far Financial Accounting NRV
NCI Noncontrolling Interests Equity claims of minority shareholders in subsidiaries; shown in the equity section of consolidated statements Financial Accounting
NFO Need of Funds for Operations Cash trapped in daily operations: operating cash + receivables + inventory minus payables Operational Finance WC, WCR, NWC
NOPAT Net Operating Profit After Taxes Operating income multiplied by (1 minus the tax rate); used in EVA calculations Managerial Accounting EBIT
NPD New Product Development The process of bringing a new product from concept to market Operations Strategy
NPS Net Promoter Score Single metric measuring customer loyalty by asking how likely they are to recommend you Marketing Management
NPV Net Present Value The present value of future cash flows minus the initial investment; positive NPV means the project creates value Corporate Finance IRR
NRV Net Realizable Value Expected selling price minus costs to complete and sell; used as "market" in the LOCOM test under IFRS Financial Accounting NBV
NVC Non-Verbal Communication All communication beyond words: gestures, posture, eye contact, vocal tone Communication
NWC Net Working Capital Alternative name for NFO used in some textbooks Operational Finance NFO, WCR
NX Net Exports Exports minus imports -- the trade balance component of GDP Global Economics
OBT Outcome-Based Theory IESE's motivation theory analyzing four types of consequences from a person's interactions with their environment Leadership
OCI Other Comprehensive Income Revenues and expenses that bypass the income statement and go directly to equity Financial Accounting AOCI
OE Operational Effectiveness Performing the same activities as competitors but doing them better -- faster, cheaper, fewer defects Competitive Strategy
OLS Ordinary Least Squares The standard regression method that minimizes the sum of squared prediction errors Business Analytics
P/E Price-to-Earnings Ratio Stock price divided by earnings per share -- the most common equity valuation multiple Corporate Finance EV/EBITDA
PE Private Equity Investment firms that acquire companies (often using leverage), improve them, and sell for profit Corporate Finance VC
PLC Product Life Cycle The four stages a product passes through: introduction, growth, maturity, and decline Marketing Management
POD Point of Differentiation The unique benefit that sets a brand apart from its competitors in the customer's mind Marketing Management
POS Point of Sale The location or system where a retail transaction occurs; also the data captured at that moment Operations Strategy
PP&E Property, Plant, and Equipment Physical long-term assets used in operations: buildings, machinery, vehicles, land Financial Accounting FA
PS Producer Surplus The extra value sellers get because the market price is higher than the minimum they would have accepted Global Economics CS
PV Present Value What a future cash flow is worth today after discounting at the appropriate rate Corporate Finance NPV
QE Quantitative Easing Central bank purchases of long-term assets to push down long-term interest rates when short-term rates hit zero Global Economics
QS Quality Score Search engine's rating of your ad's relevance, click-through rate, and landing page experience Marketing Planning and Implementation
RBV Resource-Based View Strategy theory arguing that competitive advantage comes from a firm's unique resources and capabilities Competitive Strategy
RFM Recency, Frequency, Monetary Value Behavioral segmentation model scoring customers on how recently, how often, and how much they buy Marketing Management
RI Residual Income Operating income minus a capital charge (cost of capital times invested capital) Managerial Accounting EVA
RM Raw Materials Items in inventory awaiting use in production Financial Accounting WIP, FG
ROA Return on Assets Net income divided by total assets -- how well the company uses all its resources to generate profit Financial Accounting ROE, ROI
ROAS Return on Ad Spend Revenue generated from an ad campaign divided by the cost of that campaign Marketing Planning and Implementation ROI
ROC Return on Customer Level of customer engagement generated per euro invested in social media Marketing Planning and Implementation ROI
ROE Return on Equity Net income divided by shareholders' equity -- how well the company rewards its owners Financial Accounting ROA, ROIC
ROI Return on Investment Operating income divided by invested capital -- general measure of investment performance Managerial Accounting ROE, ROA
ROO Return on Objectives How well a social media campaign meets the specific strategic goals you set for it Marketing Planning and Implementation ROAS
ROP Reorder Point Inventory level at which you should place a new order to avoid running out Operations Management
ROS Return on Sales Net profit divided by sales -- how much profit you keep from each euro of revenue Operational Finance
RP (DA) Risk Premium (Decision Analysis) EMV minus CE: the amount of expected value you sacrifice to eliminate risk from a gamble Decision Analysis RP (Ops Mgmt)
RP (Ops) Review Period Time between consecutive inventory checks in a periodic review system Operations Management RP (DA)
RPA Robotic Process Automation Software that automates routine, rule-based tasks previously done by humans Operations Strategy
RRP Recommended Retail Price The price a manufacturer suggests retailers charge consumers Marketing Planning and Implementation
SAFE Simple Agreement for Future Equity Startup financing instrument that converts to equity at a future priced funding round Entrepreneurship 2
SAM Serviceable Addressable Market The portion of TAM that your business model can realistically reach and serve Marketing Management TAM, SOM
SE Standard Error Measure of how much a statistical estimate would vary across different random samples Business Analytics
SEM Search Engine Marketing Paying for sponsored ad links to appear at the top of search engine results Marketing Planning and Implementation SEO
SEO (Mkt) Search Engine Optimization Techniques to make your website rank higher in free, organic search results Marketing Planning and Implementation SEM
SEO (Fin) Seasoned Equity Offering A new stock issuance by a company that already has publicly traded shares Corporate Finance IPO
SG&A Selling, General, and Administrative Indirect operating costs: sales force, marketing, headquarters, legal, HR Financial Accounting COGS
SKU Stock Keeping Unit A unique identifier for each distinct product or item in inventory Operations Strategy
SML Security Market Line Graph showing the CAPM relationship between expected return and beta for individual securities Corporate Finance CML
SMM Social Media Marketing Using social media platforms to promote products, build brand awareness, and engage customers Marketing Planning and Implementation SMO
SMO Social Media Optimization Adding share buttons, reviews, and social plug-ins to your website to encourage social sharing Marketing Planning and Implementation SMM
SOM Serviceable Obtainable Market The slice of SAM you can realistically capture in the near term given current resources Marketing Management SAM, TAM
SOV Share of Voice A brand's advertising spending as a percentage of total category advertising spending Marketing Management SOM
SRAS Short-Run Aggregate Supply Upward-sloping curve showing total output when wages are sticky and have not yet adjusted to price changes Global Economics LRAS
SS Safety Stock Extra inventory held as a buffer against unexpected demand during the vulnerable period Operations Management
SSR Sum of Squared Residuals Total of all squared prediction errors; the quantity that regression minimizes Business Analytics
STP Segmentation, Targeting, Positioning The three-step process of dividing a market, choosing whom to serve, and deciding how to be perceived Marketing Management
TAM Total Addressable Market The total revenue opportunity if you captured 100% of the market Marketing Management SAM, SOM
TCO Total Cost of Ownership Full cost of owning a product over its entire life: purchase price plus setup, operations, maintenance, and disposal Marketing Management EVC
TN True Negative A case the model correctly predicted as negative -- correctly cleared Business Analytics FN
TP (Analytics) True Positive A case the model correctly predicted as positive -- correctly caught Business Analytics FP
TP (Acctg) Transfer Price The price charged by one division of a company to another for an internal transaction Managerial Accounting
TR Tax Revenue Total tax collected by the government: tax rate times the quantity still traded after the tax Global Economics
TT Throughput Time Total time an item spends in the system from entry to exit, including all waits Operations Management CT
UX User Experience How easy, intuitive, and satisfying a product or website is to use Marketing Planning and Implementation
VAT Value Added Tax Consumption tax added at each stage of production; the end consumer bears the full cost Financial Accounting
VC Venture Capital Financing provided to early-stage, high-potential startups in exchange for equity Entrepreneurship 1 PE
VIF Variance Inflation Factor Diagnostic number measuring how much multicollinearity inflates a regression coefficient's uncertainty; VIF above 5 is a warning Business Analytics
VMI Vendor-Managed Inventory Arrangement where the supplier manages the retailer's inventory levels and replenishment Operations Strategy
VP Vulnerable Period Time window that safety stock must cover: lead time plus review period Operations Management
VPC Value Proposition Canvas Tool mapping customer jobs, pains, and gains against your product's pain relievers and gain creators Entrepreneurship 2 BMC
VRIS Value, Rarity, Imitability, Substitutability Systematic test for whether a resource can sustain competitive advantage; also called VRIO or VRIN Competitive Strategy
WAC Weighted Average Cost Inventory method assigning the average cost of all units to both COGS and ending inventory Financial Accounting FIFO, LIFO
WACC Weighted Average Cost of Capital Blended cost of all a company's financing (equity and debt), used as the discount rate for FCF Corporate Finance CAPM, Cost of Equity
WC Working Capital Equity plus long-term debt minus fixed assets; the permanent financing available to fund daily operations Operational Finance NFO, NWC
WCR Working Capital Requirements Alternative name for NFO used in some textbooks Operational Finance NFO, NWC
WIP Work-in-Process Items that have entered the production system but have not yet been completed Operations Management FG, RM
WTP Willingness to Pay The absolute maximum price a buyer would pay for a product -- a theoretical ceiling, not the actual price Competitive Strategy EVC
ZLB Zero Lower Bound The constraint that nominal interest rates cannot be cut below zero, limiting conventional monetary policy Global Economics QE