MGMT1 Final
Accounting cycle
6-step procedure that results in the preparation and analysis of the major financial statements. 1.Analyze source documents (sales slips, travel records, etc) 2.Record transactions in journal 3.Transfer (post) journal entries to ledger 4.Take a trial balance 5.Prepare financial statements 6.Analyze financial statements
Net profit or loss
After deducting all expenses, determine the firm's net income before taxes
Packaging
Attracts customer attention, Offers protection- during transportation, handling, and storage. Offers protection from theft - UPC, RFID. Explain benefits, express warnings. Meets government & seller needs.
Journal
Bookkeepers record financial data from the original transaction documents (sales slips and so forth) into a record book or computer program called a journal
Branding
Brand-a name, symbol, or design that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors
Computer-aided design (CAD)
Businesses ranging from construction companies to carmakers to video game designers depend on 3D modeling software to create new products.
The 5 C's of Credit
Capacity, Capital, Collateral, Conditions, Character
Titles of financial managers
Chief financial officer (CFO), A comptroller - chief accounting officer. CFP - Certified Financial Planner CFA - Chartered Financial Analyst
Obtaining Long-term financing
Debt Financing, Term-loan agreement, Risk/return trade-off, debt-financing by issuing bonds, equity financing by selling stock, retained earnings, and venture capital, using leverage, cost of capital
Liabilities
Debt. Current liabilities due in one year or less. Long-term liabilities are debts not due for one year or more.
Over-the-counter market (OTC)
Exchange that provides a means to trade stocks not listed on the national exchanges. Created in 1934 through the securities and exchange act.
Obtaining Short-term financing
Family and Friends, Commercial banks, short-term loans (secured loan, unsecured loan, line of credit), factoring (process of selling accounts receivable for cash).
FIFO
First-in, First-out
Key Dodd-Frank Provisions
Gave the government power to seize and shutter large financial institutions on the verge of collapse. Put derivatives and complicated financial deals (including those that packaged subprime mortgages) under strict government oversight. Required hedge funds to register with the SEC and provide information about trades and portfolio holdings. Created the consumer financial protection bureau to watch over the interest of American consumers by reviewing and enforcing federal financial laws.
Placement
Getting the Product to the right place. Intermediaries are important because getting a product to consumers when and where they want is critical. Physical vs digital vs omnichannel. Exclusive vs wide. Partnership vs direct to consumer
Gross profit
How much a firm earned by buying (or making) and selling merchandise.
Money has time value
If someone offered to give you $200 either today or one year from today, you would benefit by taking the $200 today because you could invest that and it will grow throughout the year.
Stock Quote
Includes the highest and lowest price the stock traded for that day, the stock's high and low over the past 52 weeks, the dividend paid(if any), the stock's dividend yield (annual dividend as a percentage of the stock's price per share), important ratios like the price/earnings(P/E) ratio (the price of the stock divided by the firm's per-share earnings), and the earnings per share.
5 Investment Criteria
Investment risk - the chance that an investment will be worth less at some future time than it's worth now. Yield - The expected return on an investment, such as interest or dividends, usallly over a period of one year. Duration - the length of time your money is committeed to an investment Liquidity - how quickly you can get back your invested funds in cash if you want or need them. Tax consequences - how the investment will affect your tax situation.
Municipal bond
Issued by states, cities, counties, and other state and local government agencies; usually exempt from federal taxes
LIFO
Last-in, First-out
Customer Relationship Management (CRM)
Learning as much as possible about customers and doing everything you can to satisfy or exceed their expectations
Advantages of equity financing
Less risk than debt, no paying back funds, gain credibility through investor networks, investors don't expect immediate ROI, Fixed payments for better budgeting.
Quality control
Maintaining quality means consistently producing what the customer wants while reducing errors before and after delivery.
Treasury note
Matures in 10 years or less; sold in denominations of $1000 up to $10,000
Double-entry bookkepping
Practice of writing every transaction in 2 places.
Marketing Mix
Product, Place, Promotion, Price
Demand-based pricing
Target costing - designing a product so that it satisfies customers and meets the profit margins desired by the firm.
Mission - what is your objective? Market - to whom? Message - what must be communicated? Different customers may be interested in different messages. Media - usually more than one Money - what is your budget Measurement - how is success/failure monitored
The 6 M's of Communication
Blockchains
Traceability, Accuracy, Efficiency, Transparency. -> more money for creators. Set up barriers: standards, markets, technology, cost to create, and incumbents.
Capital gains
a company that achieves its objectives offers great potential for this. The positive difference between the price at which you bought a stock and what you sell it for.
Balance Sheet
a financial statement that reports a firm's financial condition at a specific time. Measures a firm's values. Assets are listed in a separate column from liabilities and owner's equity. assets are equal, or balanced with, the liabilities and owner's equity. Assets = Liabilities+Owner's equity
Cloud computing
a form of virtualization in which a company's data and applications are stored at offsite data centers accessed over the Internet. Private clouds are wholly behind a firewall. Public clouds run on remote computers. Hybrid clouds consist of a private cloud for essential tasks, but use a public cloud as needed. Changes the way people and businesses use technology.
Retailer
a marketing intermediary, like a supermarket or a shoe store, that sells to ultimate consumers.
Stockbroker
a registered representative who works for a brokerage firm as a market intermediary to buy and sell securities for clients.
Operations management
a specialized area in management that converts or transforms resources, including human resources like technical skills and innovation, into goods and services. They are all about creating a good experience for those who use the service
Retained earnings
accumulated earnings from the firm's profitable operations that are reinvested in the business and not paid out to stockholders in distributions of company profits.
Promotion mix
advertising, personal selling, public relations, publicity, word of mouth, sales promotions
Promotion
all the techniques sellers use to inform people about and motivate them to buy their products or services.
Convertible bonds
allow bondholders to convert their bonds into shares of common stock
Mutual fund
an organization that buys stocks and bonds and then sells shares in those securities to the public.
Stock exchange
an organization whose members can buy and sell (exchange) securities on behalf of companies and individual investors.
Financial planning
analyzing short-term and long-term money flows to and from the firm. Its overall objective is to optimize the firm's profitability and make the best use of its money.
Product
any physical good service or idea that satisfies a want or need plus anything that would enhance the product in the yes of consumers
NFTs
anything digital; art, drawings, music, tweets, videos, GIF's. Most are part of Ethereum blockchain, with added features beyond coins. Each one has a unique token on the blockchain. Creator can be paid each time the NFT is sold.
Ratio Analysis
assessment of a firm's financial condition, using calculations and financial raios developed from the firm's financial statements.
Secure bonds
back by collateral such as land or equipment
Gantt Chart
bar graph showing production managers what projects are being worked on and what stage are in at any given time.
Buying stock on margin
borrowing some of the stocks' purchase costs from the brokerage firm. Margin is the portion of the stock's purchase price that the investor must pay with their own money. If a broker issues a margin call, the investor has to come up with money to cover losses.
Inbound logistics
brings raw materials, packaging, and other goods and services, and information from suppliers to producers.
Diversification
buying several different types of investments to spread the risk of investing. By diversifying with a portfolio strategy or allocation model, investors decrease the chance of losing everything they have invested.
Explicit knowledge
codified, documented, easily reproduced, and widely distributed.
Exchange-traded funds (ETFs)
collection of stocks that are traded on exchanges but are traded more like individual stocks than like mutual funds.
Materials requirement planning (MRP)
computer-based operations management system that uses sales forecasts to make sure needed parts and materials are available at the right time and place.
Net neutrality
concept that internet service providers should provide the same level of access to all websites regardless of their content
Channel of distribution
consists of a whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers.
Supply chain(value chain)
consists of all the linked activities various organizations must perform to move goods and services from the sources of raw materials to ultimate consumers.
Online retailing
consists of selling goods and services to ultimate consumers online.
Activity Ratio
converting the firm's inventory to profits is a key functino of management. Activity ratios tell us how effectively management is turning over inventory.
Bond
corporate certificate indication that an investor has lent money to a firm (or gov).
Current ratio
current assets / current liabilities.
Accounts payable
current liabilities or bills the company owes others for merchandise or services it purchased on credit but has not yet paid for.
Flexible Manufacturing
designing machines to do multiple tasks so they can produce a variety of products.
Demographic segmentation
dividing the market by age, income, and education level.
Geographic segmentation
dividing the market by cities, counties, states, or regions.
Psychographic segmentation
dividing the market using the group's values, attitudes, and interests
Market segmentation
dividing the total market into groups whose members have similar characteristics
Assets
economic resources (things of value) owned by a firm.
Total Product offer
everything that consumers evaluate when deciding whether to buy something.
Web 3.0
expanding the utility of the Internet by enabling an unprecedented level of decentralization and security. A combination of technologies adds intelligence and changes how people interact with the web, and vice versa
Distribution warehouse
facilities used to gather and redistribute products.
Securities market
financial marketplaces for stocks, bonds, and other investments - serve 2 major functions. 1.They assist businesses in finding long-term funding to finance capital needs, such as expanding operations, developing new products, or buying major goods and services. 2.They provide private investors a place to buy and sell securities (investments), such as stocks and bonds, that can help them build their financial future.
Initial public offering (IPO)
first public offering of a corporation's stock
Social Commerce
form of electronic commerce that involves using social media, online media that supports social interaction, and user contributions to assist in the online buying and selling of products and services.
New York Stock Exchange (NYSE)
founded in 1792, primarily a floor-based exchange, which means trades physically took place on the floor of the stock exchange. Rules have changed and now allows trading of all US stocks regardless of the exchange to be listed on its historic floor.
Programs trading
giving instructions to computers to automatically sell if the stock price dips to a certain point to avoid potential losses
Primary markets
handle the sale of new securities.
Secondary markets
handle the trading of securities between investors, with the proceeds of the sale going to the seller.
Basic Earnings per share
helps determine the amount of profit a company earned for each share of outstanding common stock. Basic EPS = Net income after taxes/# of common stock shares outstanding
Operations management planning
helps solve many of the problems in the service and manufacturing sectors.
Stock splits
high per-share prices can induce companies to declare this, in which they issue two or more shares for everyone that's outstanding. Reasoning is to decrease the market value of common stock
Junk bond
high-risk, high-interest bonds
Storage warehouse
holds products for a relatively long time. Seasonal goods such as lawn mowers are kept in such a warehouse.
Tacit knowledge
in the minds of employees, based on their experience and backgrounds
Dodd-Frank Wall Street Reform and Consumer Protection Act
increased financial regulation affecting accounting by increasing the power of the PCAOB to oversee auditors of brokers and dealers in securities markets.
Return on Equity ratio
indirectly measures risk by telling us how much a firm earned for each dolar invested by its owners.
Bears
investors who believe stock prices are going to decline.
Bulls
investors who believe stock prices are going to rise
Yankee bond
issued by a foreign government; payable in US dollars.
Current Assets
items that can or will be converted into cash within one year. Include cash, accounts receivable, and inventory.
Advantages of Debt financing
keep full ownership, no obligations after paying debt, interest is tax deductible, short and long-term option, more cash on hand.
Institutional investors
large organizations - such as pension funds, mutual finds, and insurance companies.
Fixed Assets
long-term assets that are relatively permanent such as land, buildings, and equipment.
Intangible assets
long-term assets that have no physical form but do have value. Includes Patents, trademarks, copyrights, and goodwill.
Bonds payable
long-term liabilities; money lent to the firm by bondholders that it must pay back.
Fixed-position layout
major feature of planning is scheduling work operations. DIfferent jobs such as roofing contractor, painting contractor, etc.
Need for operating funds
managing day-by-day needs of the business, controlling credit operations, acquiring needed inventory, and making capital expenditures.
Treasury bond
matures in 25 years or more; sold in denominations of $1000 up to $1,000,000
Treasury bill (t-bill)
matures in less than a year; issued with a minimum denomination of $1000.
Liquidity Ratios
measure a company's ability to turn assets into cash to pay its short-term debts (liabilities) that must repaid within one year.
Profitability (performance) ratio
measure how effectively a firm's managers are using its various resources to achienve profits. Three of the more important ratios are earnings per share (EPS), return on sales, and return on equity.
Leverage (debt) ratio
measure the deree to which a firm relies on borrowed fund in its operations
Cost-based pricing
measures cost of producing a product including materials, labor, and overhead
Diluted earnings per share
measures the amount of profit earned for each share of outstanding common stock.
Acid-test ratio
measures the cash, marketable securities (such as stocks and bonds), and receviables of a firm, compaired to its current liabilities. This is on the balance sheet.
Cost of goods sols (or cost of goods manufactured)
measures the cost of merchandise the firm sells or the cost of raw materials and supplies it used in producing items for resale. Include the purchase price plus any freight changes paid to transport goods, plus storage costs
Debt-to-owners equity ratio
measures the degree to which the company is financed by borrowed funds that it must repay.
Inventory turnover ratio
measures the speed with which inventory moves through the firm and gets converted into sales. inventory turnover = costs of goods sold/average inventory.
Program Evaluation and Review Technique (PERT)
method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project. 1.Analyzing and sequencing tasks. 2.Estimating the time needed to complete each task. 3.Drawing a PERT network illustrating the first two steps. 4.Identifying the critical path
Revenue
monetary value of what a firm received for goods sold, services rendered, and other payments (such as rent received, money paid to thte form for use of its patents, interest earned, etc).
Venture capital
money that is invested in new or emerging companies that are having great profit potential.
Enterprise resource planning (ERP)
newer version of MRP that combines the computerized functions of all the divisions and subsidiaries of the firm-such as finance, human resources, and order fulfilment-into a single integrated software program that uses a single database.
Marketing Intermediaries
organizations that assist in moving goods and services from producers to businesses (B2B) and from business to consumers (B2C).
Preferred stock
owners are given preference in the payment of company dividends and must be paid their dividends in full before any common stock dividends can be distributed. Also have a prior claim on company assets if the firm is forced out of business and its assets sold, but preferred stockholders have no voting rights in the company. Labeled by pf following the company cymbal.
Dividends
part of a firm's profits that the company may distribute to stockholders as either cash payments or additional shares of stock.
Callable bonds
permit bond issuers to pay off the principal before maturity date
Logistics
planning, implementing, and controlling of the physical flow of materials, final goods, and related informationfrom points of origin to points of consumption to meet customer requirements at a profit.
Psychological pricing
pricing goods and services at price points that make the product appear less expensive than it is.
Competition-based pricing
pricing strategy based on what all the other competitors are doing
Lean manufacturing
production of goods using less of everything than in mass production- less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product.
Sarbanes-Oxley Act
put in place new rules about auditing and consulting to ensure the integrity of the auditing process.
Intensive distribution
puts products into as many retail outlets as possible, including vending machines. Products that need intensive distribution include convenience goods such as sot drinks, candy, gum, and popular magazines
Operating expenses
rent, salaries, supplies, utilities, and insurance.
Statement of cash flows
reports cash receipts and cash disbursements related to the three major activities of a firm: Operations are cash transactions associated with running the business, Investments are cash used in or provided by the firm's investment activities, Financing is cash raised by taking on new debt, or equity capital or cash used to pay business expenses, past debts, or company dividends
Stock certificate
represents stock ownership.
Sinking fund
reserver account in which the issuer periodically retired some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date. Primary purpose is to ensure that enough money will be available to repay bondholders on the bond's maturity date.
Financial managers
responsible for paying the company's bills at the appropriate time, and for collecting overdue payments to make sure the company does not lose too much money to bad debts. Must ensure funds are available to meet daily cash needs without compromising the firm's opportunities to invest money for its future. Money has time value.
Equity financing
selling stock, from retained earnings, and from venture capital.
Budget
sets forth management's expectations for revenues and, on the basis of those expectations, allocates the use of specific resources throughout the firm.
Everyday low pricing (EDLP)
setting prices lower than competitors and then not having any special sales.
High-low pricing strategy
setting prices that are high than EDLP stores but having many special sales where the prices are lower than competitors.
Stocks
shares of ownership in a company.
Notes payable
short-term or long-term liabilities (like loans from banks) that a business promises to repay by a certain date
Income statement
shows a firm's bottom line - its profit (or loss) after costs, expenses, and taxes.
Process layout
similar equipment and functions are grouped together.
Generally accepted accounting principles (GAAP)
sometimes permit an accoutnant to use different methods of accounting for a firm's inventory. FIFO, LIFO
Investment bankers
specialists who assist in the issue and sale of new securities.
Brick-and-mortar
stores that add online outlets are sometimes called brick-and-click stores. Allow customers to choose which shopping technique suits them best.
Skimming price strategy
strategy in which a new product is priced high to make optimum profit while there's little competition.
Penetration strategy
strategy in which a product is priced low to attract many customers and discourage competition.
Trial Balance
summary of all the financial data in the account ledgers that ensures the figures are correct and balanced.
Depreciation
systematic write-off of the cost of a tangible asset over its estimated useful life.
Mass customization
tailoring products to meet the needs of individual customers. Exists in the service sector too
Modular layout
teams of workers combine to produce more complex units of the final product.
Return on sales ratio
tells us whether the firm is doing as well as its competitors in generating income from sales. Return on sales = net income/net sales
Production management
term used to describe all the activities managers do to help firms create goods.
Marketing
the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings with value for customers, clients, partners, and society at large.
Marketing research
the analysis of markets to determine opportunities and challenges, and to find the information needed to make good decisions. Identify products consumers have used in the past and what they want in the future. Research uncovers business trends, the ecological impact of decisions, global trends, and more.
The Dow Jones Industrial Average (the Dow)
the average cost of 30 selected industrial stocks.
Production
the creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge
Maturity date
the exact date of the issuer of a bond must pay the principal to the bondholder.
Principle
the face value (dollar value) of a bond, which the issuing company is legally bound to repay in full to the bondholder on the bond's maturity date.
The Securities and Exchange Commission (SEC)
the federal agency responsible for regulating the various stock exchanges.
Purchasing
the function that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for quality goods and services.
Common stock
the most basic form of ownership in a firm.
New product development
the odds a new product will fail are high. new product potential- NFTs, Metaverse, Customized/Personalized Products. It takes about seven ideas to generate one commercial product.
Interest
the payment the bond issuer makes to the bondholders to compensate them for the use of their money.
Financial control
the process in which a firm periodically compares its actual revenues, costs, and expenses with its budget
Statistical quality control (SQC)
the process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning.
Accounting
the recording, classifying, summarizing, and interpreting of financial events and transactions in an organization to provide management and other interested parties the financial info they need to make good decisions about its operations.
Critical path
the sequence of tasks that takes the longest time to complete.
Web 2.0
the set of tools that allow people to build social and business connections, share information, and collaborate on projects online with user-generated sites like blogs, wikis, social networking sites, and other online communities, and virtual worlds.
Price leadership
the strategy by which one of the more dominant firms set the pricing practices that all competitors in an industry follow.
Computer-integrated manufacturing (CIM)
the uniting of computer-aided design with computer-aided manufacturing.
Owner's equity
the value of what stockholders own in a firm (minus liabilities). The amount of the business that belongs to the owners, minus any liabilities the business owes. Assets minus liabilities.
Just-in-time(JIT) inventory control
to cut costs, many companies have implemented a concept. A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line. To work effectively, the process requires excellent coordination with suppliers.
Debenture bonds
unsecured bonds, not backed by any specific collateral (such as land or equipment). Only firms with excellent reputations and credit ratings can issue debenture bonds, due to lack of security to provide investors.
Computer-aided manufacturing (CAM)
use of computers in the manufacturing process
Assembly-line layout
workers do only a few tasks at a time.
NASDAQ (National Association of securities Dealers Automated Quotations)
world's first electronic stock market.
