Business

Yield

Interest income a purchaser receives from the bond.

Liquidity Ratios

Measure a firm's ability to pay its short-term obligations. Current Ratio & Quick Ratio.

Stock

Ownership of or equity in a company.

Fiscal Policy

Use of government revenue collection and spending to influence the business cycle.

Theory X

A managerial assumption that employees are irresponsible, are unambitious, and dislike work and that managers must use force, control, or threats to motivate them.

Theory Y

A managerial assumption that employees enjoy meaningful work, are naturally committed to certain goals, are capable of creativity, and seek out responsibility under the right conditions.

Bubble

A market situation in which frenzied demand for an asset pushes the price of that asset far beyond its true economic value.

Debt-to-Assets Ratio

A measure of a firm's ability to carry long-term debt, calculated by dividing total liabilities by total assets. Leverage Ratio.

Earnings Per Share Ratio

A measure of a firm's profitability for each share of outstanding stock, calculated by dividing the net income after taxes by the average number of shares of common stock outstanding.

Quick Ratio

A measure of a firm's short-term liquidity, calculated by adding cash, marketable securities, and receivables, then dividing that sum by current liabilities. Liquidity Ratio.

Current Ratio

A measure of a firm's short-term liquidity, calculated by dividing current assets by current liabilities. Liquidity Ratio

Debt-to-Equity Ratio

A measure of the extent to which a business is financed by debt as opposed to invested capital, calculated by dividing the company's total liabilities by owner's equity. Leverage Ratio.

Accounts Receivable Turnover Ratio

A measure of the time a company takes to turn its accounts receivable into cash, calculated by dividing sales by the average value of accounts receivable for a period. Activity Ratio.

Inventory Turnover Ratio

A measure of the time a company takes to turn its inventory into sales, calculated by dividing cost of goods sold by the average value of inventory for a period. Activity Ratio.

Bonds

A method of funding in which the issuer borrows from an investor and provides a written promise to make regular interest payments and repay the borrowed amount in the future.

Maslow's Heirarchy

A model in which human needs are arranged in a hierarchy, with the most basic needs at the bottom and the more advanced needs towards the top.

Push Strategy

A promotional strategy that focuses on the intermediaries, motivating them to promote products toward end users.

Pull Strategy

A promotional strategy that stimulates consumer demand via advertising and other communication efforts, thereby creating a pull effect through the channel.

Balance Sheet

A statement of a firm's financial position on a particular date.

Leverage Ratios

Also known as debt ratios, a company's ability to pay its long-term debts.

Accounts Payable

Amounts a firm currently owes to other parties.

Accounts Receivable

Amounts that are currently owed to a firm.

Marketing Concept

An approach to business management that stresses customer needs and wants, seeks long-term profitability, and integrates marketing with other functional units within the organization.

Activity Ratios

Analyze how well a company is managing and making use of it's assets. Inventory Turnover Ratio & Accounts Receivable Turnover Ratio.

Commercial Banks

Banks that accept deposits, offer various checking and savings accounts, and provide loans.

Managerial Roles

Behavioral patterns and activities involved in carrying out the functions of management; includes interpersonal, informational, and decisional roles.

Skim Pricing

Charging a high price for a new product during the introductory stage and lowering the price later.

SWOT Analysis

Developing forecasts, analyzing competition; establishing goals and objectives and developing action plans.

Mutual Funds

Financial instruments that pool money from many investors to buy a diversified mix of stocks, bonds, or other securities.

Investment Banks

Firms that offer a variety of services related to initial public stock offerings, mergers and acquisitions, and other investment matters.

Business Cycles

Fluctuations in the rate of growth that an economy experiences over a period of several years.

Product Life Cycle

Four stages through which a product progresses: introduction, growth, maturity, and decline.

Net Income

Profit earned or loss incurred by a firm, determined by subtracting expenses from revenues; casually referred to as the bottom line.

Importing

Purchasing of goods or services from another country and bringing them to one's own country.

Break-Even

Sales volume at a given price that will cover all of a company's costs.

Exporting

Selling and shipping good or services to another country.

Common Stock

Shares of ownership that include voting rights.

Preferred Stock

Shares of ownership without voting rights but with defined dividends.

Portfolio Diversification

Spreading investments across enough different vehicles to protect against significant declines in any one vehicle.

Monetary Mass

Sum total of money in the economy.

Price/Earnings Ratio

The Market Value per share divided by the earnings per share.

Price

The amount of money charged for a product or service.

Face Value

The amount of money, or principal, a bond buyer lends to a bond issuer.

Gross Profit

The amount remaining when the cost of goods sold is deducted from net sales.

Federal Reserve

The central banking system of the United States; responsible for regulating banks and implementing monetary policy.

Accounting Equation

The equation stating that assets equal liabilities plus owners' equity.

Matching Principle

The fundamental principle requiring that expenses incurred in producing revenues be deducted from the revenues they generate during an accounting period.

Retained Earnings

The portion of shareholders' equity earned by the company but not distributed to its owners in the form of dividends.

Market Value

The price at which the stock is actually selling in the stock market.

Management

The process of planning, organizing, leading, and controlling to meet organizational goals.

Return on Sales Ratio

The ratio between net income after taxes and net sales. Also known as profit margin. Profitability Ratio

Return on Equity Ratio

The ratio between net income after taxes and total owners' equity. Profitability Ratio.

Profitability Ratios

These allow one to analyze how well a company is conducting ongoing operations, showing the state of the company's financial performance or how well it's generating profits. Return on Sales Ratio, Return on Equity Ratio, & Earnings per Share.