| Definition of technical terms | |
| Terms | Definition; Meaning |
| CGS = cost of goods sold | beginning inventory + cost of goods manufactured - ending inventory [for mfg firms] |
| beginning inventory + cost of goods purchased - ending inventory [for non-mfg firms, such as general trading companies] | |
| CS&GA = selling, general and administrative costs | expenses not specifically identifiable with, nor assigned to, production. |
| parent firm [oya gaisya] | firm that controls the final decisions of other firms |
| subsidiaries [ko gaisya] | other firms above |
| More than half of the voting shares are owned by their parent company | |
| Though not owning more than half, their parent company controls the final decisions of other firms | |
| e.g. in Arakawa, et al. (1998,pp.46-49) | |
| consolidated subsidiaries | subsidiaries above |
| unconsolidated subsidiaries | subsidiaries above that are not important enough with respect to total asset, sales, profit, etc. See Arakawa, et al. (1998,pp.52-55, 120). |
| affiliates (affiliated firms) [kanren gaisya] | Less than or equal to half but more than or equal to 20% of the voting shares are owned by their parent company. See Arakawa, et al. (1998,p.120). |
| The equity method (mochin-bun hou) applies to unconsolidated subsidiaries and affiliated firms. See Arakawa, et al. (1998,pp.116-125). | |
| Real Gross Domestic Product | Consumption+Investment+Gvmt Expenditure+Exp-Imp [excld. Jpn product abroad] |
| profit | Sales revenue - CGS = Gross margin or gross profit ("uriage sou rieki") |
| Gross margin - CS&GA = Operating profit | |
| Operating profit + Non-operating profit - Non-operating cost = Ordinary profit | |
| Ordinary profit + Extraordinary profit - Extraordinary loss = Before-tax profit | |
| Before-tax profit - Corporate taxes = After-tax profit (net profit) | |
| indirect costs | costs of production not easily assosiated with the produciton of specific goods and services. |
| direct costs | costs of direct material, direct labor, and variable overhead incurred in producing a product. (costs applied and assigned directly to a product.) |