GEB 3113 Final

Ratio Analysis

A series of ratios along four areas of company performance (liquidity, activity, leverage, profitability) that provides a picture of the health of the company.

Factoring

Accounts receivable that are sold at a discount to another company in order to receive immediate cash.

Profit Sharing

An example of a hybrid compensation system. The firm may set some relatively low level of salary but offer to share a percentage of the profits at the end of the year or some other period of time with the employees.

Deviation Analysis

Analysis of the differences between the predicted and the actual performance.

Supplier Credit

Another form of non-equity or debt, that do not require repayment and are designed to aid businesses in specific areas.

Human Resources

As defined in economics, the quantity and quality of human effort directed toward producing goods and services.

Credit Card

Card entitling one to revolving credit that is not tied to any particular asset, does not have a set repayment schedule, and is usually tied to a much higher interest rate than that of a bank loan.

Loans

Contractual agreements whereby the firm receives some amount of money that must be repaid over a specified period of time at a specified interest rate.

Job Description

Document that describes the job that is to be filled.

Unemployment Compensation

Financial assistance for some period of time to those people who lose their jobs through no fault of their own; provided in every state by law.

Equity Investment

Funds received by a business in exchange for a percentage of ownership of the business.

Business Angels

High-net-worth individuals that invest in businesses not as a business, but as an individual.

Discrimination

Hiring, dismissal, level of pay, or promotions based on the basis of race, color, gender, religious beliefs, or national origin of the employee. Such actions are prohibited by federal and state laws.

Worker's Compensation

Laws designed so that employees who are disabled or injured while on the job are provided with some type of compensation.

Commission

Payment by the small business owner of some percentage of sales, typically associated with the compensation of sales representatives.

Leverage Ratios

Ratios that are used to examine the relative level of indebtedness of the small business.

Profitability Ratios

Ratios that examine the performance of the firm and its ability to make economic rents over and above its costs.

Activity Ratios

Ratios that measure the efficiency with which you are handling the resources of the business.

Liquidity Ratios

Ratios that measure the short-term ability of the firm to meet its obligations.

Performance Review

Review by the small business owner of the employees' goals and outcomes on those goals over some given period.

Bonus

Similar to profit sharing, a reward offered to the employees based on their performance. Typically, bonus systems are not as well defined as profit sharing; instead, the level of reward it left to the discretion of the small business owner.

Grants

Special funds, neither equity or debt, that do not require repayment and are designed to aid businesses in specific areas.

OHSA

The Occupational Safety Health Administration, which is charged with protecting the health of workers.

Fair Labor Standards Act (FLSA)

The act that established a minimum wage for workers.

Hourly Wage

The amount paid per hour for work performed.

Shrinkage

The difference between what is sold and what was brought into the business.

Salary

The set amount of compensation for a given time period.

Equity Theory

The theory that we all judge how we are treated relative to how we see others being treated.

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.

Hybrid Compensation System

A compensation system where there is a salary along with commission.

Profit & Loss (P&L) Statement

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time.

Asset Lease

A form of lease tied to a particular asset used by a business to conserve cash and maintain the latest versions of whatever equipment is available.

Venture Capital Fund

A fund that is organized to make significant equity investments in high-growth new ventures.

Debt

A generic term to describe any type of non-equity funding tied to the business.

Asset-Based Lending

A loan provided for the purchase of a necessary asset for the business.