Category: Business – This Explainer

Operating expenses include the selling, administrative, and support costs required to run a business. This explainer covers classification, fixed and variable behavior, budgeting, and the risks of cutting the wrong costs.

Pricing power describes how successfully a business can change prices while preserving demand and customer value. This explainer covers differentiation, switching costs, elasticity, segmentation, and sustainable pricing decisions.

Total addressable market estimates the maximum annual revenue opportunity if an offering served its entire defined market. This explainer shows how scope, pricing, bottom-up evidence, and realistic market segments shape the estimate.

A competitive moat is a durable advantage that helps a business defend customers, margins, or market position. This explainer covers switching costs, scale, networks, intellectual property, brand trust, and the evidence needed to test durability.

Economies of scope arise when a company can share resources across products, services, or customer groups. This explainer covers shared distribution, data, technology, brands, and the coordination costs that can offset the benefit.

Supply chain resilience helps a business continue serving customers when suppliers, transportation, capacity, or demand are disrupted. This explainer covers mapping, risk prioritization, alternative sources, inventory buffers, and recovery plans.

Inventory management coordinates purchasing, storage, movement, and replenishment so products are available without excessive cost. This explainer covers demand, lead time, accuracy, segmentation, and the tradeoff between service and working capital.

Safety stock is a targeted inventory buffer for demand and lead-time uncertainty. This explainer covers service levels, variability, criticality, review triggers, and why a buffer cannot repair a broken process.

Economic order quantity estimates a replenishment size that balances the cost of placing orders with the cost of holding inventory. This explainer covers the classic formula, assumptions, discounts, variability, and practical adjustments.

Credit terms set the payment deadline, discount, fees, limits, and other conditions for a sale made before cash is collected. This explainer shows how terms influence customer demand, bad-debt risk, working capital, and collections.

Days sales outstanding estimates the average collection time for receivables. This explainer covers the formula, credit sales, seasonality, aging schedules, customer mix, disputes, and why a single average needs context.

Days payable outstanding estimates the average time a business takes to pay supplier obligations. This explainer covers the calculation, purchase data, negotiated terms, discounts, supplier relationships, and cash-flow tradeoffs.