Glossary

Short definitions for terms that appear across Toollabz calculators. Each entry links to related tools and guides so you can move from vocabulary to a working example.

• APR (Annual Percentage Rate)

  The yearly cost of borrowing expressed as a percentage, including interest and certain fees depending on jurisdiction. Loan calculators usually take APR as an annual rate and convert it to a monthly rate internally.

• Amortization

  The process of paying off a loan with level payments that cover interest first and gradually reduce principal. Early payments are interest-heavy; later payments are principal-heavy.

• VAT (Value Added Tax)

  A consumption tax charged on most goods and services in the UK and many other countries. Standard UK VAT is commonly 20%; reverse VAT divides a gross price by 1.20 to find net.

• Profit margin

  Profit divided by revenue (selling price), expressed as a percentage. Distinct from markup, which divides profit by cost.

• ROI (Return on Investment)

  Net gain divided by cost, usually × 100 for a percentage. Marketing teams sometimes confuse ROI with ROAS (revenue ÷ ad spend).

• BMI (Body Mass Index)

  Weight in kilograms divided by height in metres squared. Used as an adult screening measure; not a complete health assessment and not appropriate alone for children.

• Compound interest

  Interest calculated on principal plus previously credited interest. Frequency (daily, monthly, annual) changes the final balance for the same nominal rate.

• Take-home pay

  Gross salary minus income tax, National Insurance (or Social Security/Medicare), pensions, student loans, and other deductions. Progressive tax bands mean a single flat rate is often wrong.

• Net worth

  Total assets minus total liabilities at a point in time. Include property, investments, cash, and all debts for a complete snapshot.

• Break-even point

  The sales volume where contribution margin covers fixed costs: units = fixed costs ÷ (price − variable cost per unit).

• Markup

  Profit divided by cost (not revenue). A 50% markup on a £10 cost is a £15 selling price; that is a 33.3% profit margin.

• EMI (Equated Monthly Installment)

  A fixed monthly loan payment covering interest and principal, usually computed from the standard amortization formula used by banks for personal and home loans.

• Personal Allowance (UK)

  The amount of income you can earn each tax year before paying Income Tax in the UK. Above a high-income threshold the allowance is tapered. Always confirm the current year figure on GOV.UK.

• National Insurance (UK)

  UK contributions on earnings that fund state benefits. Employee and employer rates and thresholds differ from Income Tax bands, so take-home calculators must model NI separately.

• Simple interest

  Interest calculated only on the original principal: I = P × r × t. Unlike compound interest, prior interest is not added to the base.

• CAGR (Compound Annual Growth Rate)

  The constant annual rate that takes a starting value to an ending value over n years: (end/start)^(1/n) − 1. Useful for comparing investments with different paths.

• Tipping / gratuity

  A discretionary amount added for service. Customs vary by country; some bills already include a service charge. Always check the receipt before adding more.

• Percentage change

  How much a value moved relative to a baseline: ((new − old) ÷ old) × 100. Distinct from percentage points, which measure absolute differences between percentages.

• Loan-to-value (LTV)

  Loan amount divided by property value. Higher LTV usually means tighter underwriting and sometimes higher rates or fees.