Exam 3

4 classic techniques to measure a firm

1. Ratio Analysis 2.Deviation Analysis 3.Sensitivity Analysis 4.Short Surveys

Liquidity ratios

1.Current Ratios : CurrentAssets/CurrentLiabilities 2.Quick (Acid) Ratio : (CurrentAssets-Inventory)/CurrentLiabilities

Steps to writing a Job description

1.Start with a title 2.Give a job overview 3.Define the duties and responsibilities 4.Knowledge, skills, and abilities 5.Credentials and experience 6.Special requirement

Cash flow

Actual cash that flows into the firm, minus the cash that goes out of the firm.

Critical Path Chart

Chart that demonstrates how the activities necessary to start the firm fit together and build on each other. This chart allows you to understand which activities can occur concurrently and which must already be in place before the next activity can occur.

4 C's of Pricing

Customer, Company, Competition, Constraints

Leveraging Ratios

Debt to Equity : TotalLiablities/(TotalAssets-TotalLiabilities) Debt to Assets : TotalLiablities/TotalAssets Times Interest Earned : OperatingIncome/Interest

Distribution

Involves the effective physical movement of a product from the production line to the final consumer. includes: storing, order processing, and transportation

Internet recruiting

Method of recruiting that allows you to search a résumé database or post a job description to the Web. A small business owner who knows exactly what he or she wants can use filters to search vast numbers of résumés with pinpoint accuracy.

Return on assests

Net Income / Total Assests This ratio examines the ability of the firm to return an overall profit compared to the amount of assets that the firm has invested into the effort.

Profit margin

Net Income/Sales

Return on Equity

Net Income/Total Equity This ratio is used to provide all investors with an evaluation of how much each dollar of their investment is generating in profit.

Immigration Reform and Control Act of 1986

Prohibits hiring of unauthorized aliens. Prohibits employment discrimination based on national origin or citizenship status. Requires employers to complete I-9 forms for each employee.

Probationary period

Trial period in which an employee has temporary status before a formal offer to work full time is presented.

Production chart

a chart that provides a detailed understanding of a firms production process.

Sensitivity analysis

a chart utilizing current cash flow statement, income statement, or balance sheet in order to create a pro forma projection based upon a dramatic increase in sales, a dramatic decrease in sales, or the complication of a major change in the business

the Short survey

a nonfinancial method of analysis that can be useful to the entrepreneur.

Competitive edge

a particular characteristic that makes one firm more attractive to customers than its competition

Discount

a reduction from the list price given to customers as an inducement to buy more of a product

Strip shopping center

a small retail center located typically along a major road

Pro forma

a term describing estimates of what the balance sheets and income statement will look like

break-even analysis

a tool used when the businesses income exceeds expenses

Percentage of sales or profits method

advertising costs have a consistent relationship to the firm's sales volume and/or profit level

Deviation analysis

analysis of the differences between the predicted and the actual performance

Distribution channel

consists of the marketing organizations responsible for the flow of goods and services from the producer to the consumer

Market segmentation

identifying and evaluating various layers of a market

Sales promotion

includes marketing advertising and personal selling that stimulate consumer purchasing and dealer effectiveness

Title VII of the Civil Rights Act of 1964

prohibits employment agencies, employers, and unions from discriminating against applicants and employees on the basis of race, color, religion, national origin, or sex. Applies to businesses with 15+ employees for each workday in each of at least 20 calendar weeks in the current or preceding calendar year

Measurement focus

refers to what items are being reported in the financial statements

Retailers

sell goods or services directly to the ultimate consumers

Legitimacy

the acceptance by key stakeholders, such as customers and suppliers, that you are a genuine business that will still be in operation next year.

Mark up

the amount added to the product's cost to determine the selling price

Units of sales method

the firm sets aside a fixed sum for each unit of product to be sold

Target market

the part of the total market toward which promotional efforts are concentrated

Marketing research

the systematic gathering, recording, and analyzing of data relating to the marketing of goods and service