Introduction
Financial literacy is a critical skill for any business owner. Understanding key financial terms can help MSMEs make informed decisions and achieve long-term success.
- Working Capital
The funds available for day-to-day operations.
- Credit Score
A numerical representation of creditworthiness that impacts loan approvals.
- Collateral
Assets pledged to secure a loan.
- ROI (Return on Investment)
Measures the profitability of an investment.
- EMI (Equated Monthly Installment)
A fixed payment made to repay a loan over time.
- Interest Rate
The percentage charged on the principal amount of a loan.
- Debt-to-Income Ratio
A metric to assess a business’s ability to manage debt.
- Overdraft
A facility allowing businesses to withdraw more than their account balance.
- Loan Tenure
The period over which a loan is repaid.
- Fixed vs. Floating Interest Rates
Fixed rates remain constant, while floating rates fluctuate with market conditions.
Conclusion
Knowing these terms can help MSMEs navigate the financial landscape confidently.
Need clarity? Ratnaafin’s experts are here to guide you through your financial journey.”
