An inventory classification system by which inventory is classified into three groups: A, B, and C based on the investment volume in them.
The largest and most important component of current liabilities, which consists mostly of the inventory purchased on credit, and other payments due for travel, maintenance, entertainment, and the like.
It is the average payment period, which is obtained by dividing the account payable (APY) by the average daily purchase (DP).
The firm's ability and willingness to extend credit to its customers. Generally, it represents the debt owed to the firm due to selling its goods and services on credit basis.
A method to tabulate and categorize all the account receivable amounts by number of days it remains outstanding in order to examine why some accounts are not paid properly.
Annual number of times the firm can collect its account receivable. Obtained by dividing the total on-credit sales (TCS) by the average account receivable (AAR).
It is the average collection period that shows the extent to which customers pay their credit bills. It is the account receivable (AR) divided by the average daily sales (DS).
The difference between total revenue and total explicit cost.
The firm's obligations that accumulate during the normal course of operation and becomes due at the end of a certain term such as payroll payments and taxes.
It is also called the “quick” ratio, which is obtained by dividing the current assets (after taking away the inventory value) by the current liabilities.
The act and process of taking over all or part of an existing business by another business, often a strong competitor.
A non-personal and paid presentation of products, as well as of company image and values to the public.
Corporation that is incorporated abroad but doing business in the United States.
Big retail stores located at each end of a floor plan of a mall. They are supposed to attract as many shoppers as possible.
Private wealthy individuals who are motivated to contribute investment funds to the startup of new businesses for some stake in the business and for other non-economic reasons.
A leader who focuses on work and the manner it is done more than on people who do the work.
Document that shows what the firm owns versus what it owes at any given point in time.
The firm net worth or owner's equity as the difference between total assets and total liabilities: A − L = NW or TA − TL = NW or TA = TL + OE
How much was paid for an asset at the time of purchase minus the accumulated depreciation.
Value of assets and shares as is documented in the firm's records.
A simple and practical way to identify a product or company, by an image or by words.
Point at which total cost equals total revenue, and profit equals zero.
A preliminary detailed table of financial estimations for a future period.
The positive or negative deviation of the actual budgetary item from the established amount in the budget.
Only selected major assets are purchased while the ownership of the rest of the business remains with the old owners.
Financing a business by funds that are given if certain qualifications are met. The grant is neither a loan nor an ownership share.
The process of figuring out a current and reliable value for the firm to serve purposes such as financing, selling, merging, selling stock to employees, and harvesting.
Partial buying into the equity of a business, where only a part of the business ownership can be transferred to the buyer, keeping other parts owned by the seller.
Purchase of all of the business so that ownership would be transferred entirely to the buyer, including all of the liabilities attached to the business.
The process to analyze the firm's potential investment projects in order to enable managers in their decisions to enlist different projects in the capital budget.
The firm's outlay of funds that is expected to continue to reap services for the long run.
Capital mix that is used by a firm to finance its business operation.
Obtaining the present value of a stream of future cash flow.
The rate of return that the entrepreneur would chose in estimating the purchase business value.
Per unit inventory cost of holding and storing material for a certain period of time.
The most liquid asset, which includes both the ready currency and the bank demand deposits.
The time span between paying for the production purchases and collecting revenues out of the final product sales.
Money streaming into and out of the business over time.
The basic type of cash that is required for daily transactions and sales.
How many times a year the firm would be able to turn cash into a product and to cash again through the sales of the product.
The portion of estimated return that project managers would prefer to obtain “as certain” over any other return that is “just probable.”
Document of the state requirements to incorporate a business.
An organizational structure that contains specialized units such as for production, finance, marketing, accounting, and the like.
Having the customer agree to place and sign an order for the product.
Franchise inside franchise.
A measure of relative dispersion of the expected returns, which is obtained by dividing the standard deviation of returns by the firm's expected rate of return.
The period between the time a business receives a check and the time the money is actually credited to the business account.
Number of days during which the company would expect to collect the revenue of what was sold on credit.
The potential use of both operating and financial fixed costs to magnify the effect of changes in sales on the firm's earning per share. It is measured by the degree of combined leverage.
Unsecured promissory notes that are issued by firms with high credit standing such as finance and insurance companies, and pension funds.
A weighted average of the components of a group of economic indicators in barometric forecasting, which signifies the direction of movement in the whole group.
Combining two or more comparable companies, especially in size, into one that is new and different from the original companies.
Consumer's commitment to repeatedly purchase a certain brand of a product or service and keep advocating for it.
The amount of profit earned on each unit sold above and beyond the break-even quantity, and similarly, it would be the amount of loss the firm would incur on each unit produced below the break-even point.
Making sure the set standards are followed.
Combining resources of similar but independent businesses to form a collective entity.
Registered and exclusive right to reproduce, publish, and sell creative work in the fields of literature, drama, music, and art.
Making decisions to generate, manage, and monitor the flow of public and private funds in a corporation.
Business entity in which individual investors are collectively associated as owners of the business according to how many shares they hold.
Estimating the likelihood that credit applicants will be able and willing to pay the bills and abide by the credit policy.
The point at which net present value of two projects are equal, and where their curves intersect.
The rate at which the NPVs of two projects become equal to each other and where their curves intersect.
A discount offered by a vendor or supplier for loyal customers who make frequent purchases throughout the year.
Assets that can be converted to cash within a year or less.
Cash and all of the assets that can be converted to cash within 1 year such as the marketable securities, accounts receivable, and inventory.
Debt that must be paid within a year or less.
The obligations that have to be paid within a year such as the accounts payable, rent and lease payments, utilities due, insurance premiums, payroll, taxes, and the due payments on any long-term debt.
Long-term patterns of expansion and contraction in the economic activity that reflect the business cycle.
Long-term instrument that is not backed up by any collateral.
Borrowed funds to finance a business operation.
Financing a business by loans from lenders such as banks, financial firms, or individuals.
Ratios that indicate the extent to which the firm's assets are tied to the creditor's claims.
A graphical representation of the possible alternative decisions and subsequent decisions with their values and probabilities.
Transferring the right to act and make decisions from the superior to the subordinate within the administration structure.
The use of panels of experts to reach consensus on matters such as forecasting and marketing.
Goods that customers plan to get, and go to the store specifically to purchase them.
A leader who balances between his authority and the freedom and flexibility of his subordinates, as they make decisions and deal with problems.
Annual cost of the use of assets that last for more than a year.
The annual cost of the use of an asset that lasts more than 1 year.
Providing clear directions to all of those involved in the planning and implementation of business work toward accomplishing the ultimate mission of the firm.
The period between the time of writing a check for payment and the time when the money is actually taken from the payer's account.
Methods and means of getting the products to customers via the retailers and wholesalers.
Corporation that does its business in its home state.
An actual owner, but neither active nor known to the public.
When a business pays taxes twice, first as a business tax, and second as income tax on shareholders.
Systematic and detailed process of examining and investigating all the aspects of the candidate business for purchase.
Ratio of business's selling price to its annual earnings.
EBIT minus taxes.
Also called operating income, which is gross earnings minus operating expenses such as depreciation, rent, property taxes, utilities, salaries, advertising, and insurance.
Net profit or earnings after taxes divided by number of shares outstanding.
Earnings before interest, taxes, depreciation, and amortization.
The difference between total revenue and the total of both explicit and implicit costs.
Being able to do a certain job.
Being able to do the same job but in the most economic way such as in less cost or more gain.
Same as profitability ratios, which assess how efficiently firms utilize their assets, and ultimately how they are able to attract investors.
A quick but very effective description of the business idea and the ways to achieve it.
Number of employees in a year who are absent and late in their work, including those who request to be seen by a doctor.
Number of employees in a year who decide to leave their jobs, and pursue a similar or different job elsewhere.
Another avenue for harvesting, which is selling the business collectively to the current employees.
The person who could organize and direct resources into production.
Adapting the fundamental financial principles and basic theories into planning and developing, starting up, operating, growing and maturing, valuing, and harvesting entrepreneurial business projects.
Field of creating economic values through turning business ideas into viable and commercial opportunities.
Owner's investment in the firm that takes the form of long-term funds provided by the stockholders such as preferred stock, common stock, and retained earnings.
The rate for discounting the firm's future net worth.
Financing a business by capital from investors who get partial ownership of the business equal to their shares.
Business approach to allocate shares of ownership to its employees free of upfront charges, where the shares are held in a trust account, and cannot be sold until an employee leaves or retire.
A number of alternative brands that a customer may consider in his search for what he needs.
Set of predicted gain/loss for each possible decision and each possible state of nature.
Expenditures on the four factors of production and other direct payments such as taxes and interests on loans.
Forecasting model that uses the constant (α) to signify the weight of the immediate past, and (1 − α) to signify the distant past.
Risk in which a government abroad may seize the property, restrict the rights, or remove the privileges of the hosted firm.
Process of selling a firm's account receivable to a third party at a discount off of the original selling price.
Business where one or more family members are either the founder, owner, or manager of the business.
2008 Franchise Disclosure Document by the franchisor to the franchisee who was allowed up to 14 days to examine all the details before signing any contract or paying any fees.
Any transaction of money or money-related mediums of exchange and units of monetary measurement.
A professional review of all the financial records to verify their validity, discover discrepancies, and suggest improvements.
Process of predicting the future state and value of financial and economic variables and their changes, using current knowledge and present and past data.
Responsiveness of the change in the firm's earnings per share to the change in its operating income or earnings before interests and taxes. It is measured by degree of financial leverage (DFL).
The firm's responsibility to plan, acquire, and manage capital to efficiently run the business, as well as to grow it and further invest in its capital.
Compilations of data designed to provide summarized information and quick indicators of the business financial performance.
The firm's account receivable, inventory, trust, and warehouse receipts.
Assets that are gradually consumed as they contribute to the production process over an extended period of time.
Costs that are not tied to the size of production or sales of products.
The time delay between writing or depositing a check and clearing it by the bank.
A selected group of people (10–25) used to collect data on a product or issue through a series of discussions.
Span of time between the current time and the time that the forecast is for.
An informed estimation of a future value.
Corporation that conducts its business in states other than its home state.
Highly standardized and heavily structured franchise that is common, familiar, and most growing type.
Business arrangement by a legal contract in which one party (franchiser) grants the right and license of selling a product or service to the other party (franchisee).
The immediate business owner.
The ultimate business owner.
The EBITDA after subtracting capital expenditures.
Certain rewards and services to supplement the regular payments in the employee pay package.
Chart of all the required tasks, how long it should take to complete each, and who performs it.
All partners are actively involved in the business operation and management. They share profits and liabilities.
A closely held company becomes a publically traded business by selling its equity shares to the general public.
Number of complaints and grievance reports filed by employees as well as the friendly suggestions gathered in the suggestion box.
The difference between total revenue and cost of production.
The current assets.
An anticipated and planned exit strategy by which an entrepreneur or investor would extract the best value possible out of their committed investment.
Goods that are purchased with a great deal of customer's choice. They are selected with a significant level of personal taste, such as cosmetics, jewelry, and perfume.
Business that makes the owner's residence its primary facility for its operation.
Managing the workforce of an organization at all levels.
The opportunity cost of the used resources.
Goods that customers do not usually plan to buy, but they buy them on the spur of the moment, and especially when they fall into sight.
Document to show the firm's financial position over a period of time, usually a year, through the comparison between the in-resources (revenue and income), and the out-resources (expenses).
A project that does not compete with other submitted projects for the firm's funding.
The first sale of the newly offered shares to the public, when a private company goes public.
The rate that equates the present value of cash inflows with the cash outflow.
It is sometimes called “the profit rate” or “the marginal efficiency of investment.”
All items related to the firm's inputs and outputs, which would be stocked up.
The firm's internal process to prioritize, assess, select, and allocate funds for the long-term investment in its assets.
The cost to dealer, or the discounted list price.
Leader who would allow the maximum level of freedom to his subordinates.
The physical arrangement of the business facility in a way to maximize the efficiency of operation.
The time it takes the new order to arrive, which is the number of days between placing an order and receiving it.
Capacity and quality of making strategic decisions, oversee operations, and bring about the aspired changes.
The quality and capacity to make strategic decisions, oversee operations, and bring about the needed changes.
More than proportional change in one variable in response to a certain change in another related variable.
A management buyout where the purchase is financed by debt from lenders or by bringing in other investors.
All partners have limited liabilities and can share in the business operation and management.
Partners still share capital and profits but they do not share the business liability nor do they participate in the business operation and management.
The firm-determined maximum amount a customer can owe due to his/her purchases on credit.
For how much an asset would sell if the business is liquidated.
The extent to which an asset can be converted into cash.
Document that spells out the bylaws of a limited liability company (LLC).
Debt that would stay on the books for more than a year.
Goods that are purchased merely because customers need them, and may not have much of a choice in their shape, color, style, or even price.
Selling the business to existing partners or the current management team.
Effective and efficient use of resources to accomplish economic and administrative objectives during the production and growth and throughout the life of the business project.
The effective and efficient use of business resources to achieve certain objectives.
The four Ps (Product, Price, Place, and Promotion) on which an integrated marketing strategy can stand to best satisfy the needs and wants of the target customers.
A segment of a particular market, which zeroes in on a specific characteristic of the product as well as of the customer.
Focused and targetable segment of consumers who may perceive the proposed product as the best to satisfy their needs.
The use of questionnaires, observations, clinical tests, field interviews, and focus groups to know consumer and predict preferences, demand, and sales.
Certain percentage of the market that the firm succeeds in gaining.
For how much a certain asset would sell in the current market.
Any group of consumers who have something in common related to their needs and wants.
Short-term investments that include money market accounts, certificates of deposit, US treasury bills, and corporate and government stocks and bonds.
Strategy of the four Ps: product, price, place, and promotion.
The systematic process to study all the factors that may have some impact on business activity, particularly the ultimate impacts on sales and profits.
Process to bring about sales through identifying the right consumers and the right market.
Limited liability to all partners, good liquidity, and business ownership shares are sold and traded on a stock exchange.
Partner who owns 50% or more of the ownership shares in an MLP.
A method to test the closeness of the forecasted values to the actual data.
A method to test forecasting accuracy, where the forecast error is expressed as a proportion of the actual value.
Combining two or more companies that are different in and stature, so that only one would dominate others.
Favoring whoever is competent and has the merit to occupy any business position.
An organizational technique to divide business work into a series of goals and stages so that each target goal or milestone can be reached at a certain time for a certain budget.
The firm's total annual cash outlay (TACO) divided by the firm's cash turnover (CT).
Simple and direct description of how the working team would translate the company's vision into feasible and achievable goals.
A project that competes with other submitted projects to gain the firm's approval for funding.
Favoring family members in all business decisions, advantages, and privileges, so that the major factor would be the family ties.
The difference between cash inflow and cash outflow at any point in time.
Proportion of the invoice price to list price.
The present value of all future returns or cash inflows minus the initial capital invested in the project.
The relationship between a project's NPV and several alternative cost of capital rates.
The difference between total revenue and all costs, including production costs and all other costs such as taxes and interests paid and others.
The firm's short-run net worth or the difference between the current assets and the current liabilities.
The difference between current assets and current liabilities.
The difference between total assets and total liabilities. It is also called owner's equity.
Not necessarily a product or technology that has never existed before. They include a variety of applications, new inventions, and advanced technologies.
A strategy to recognize the diversity of the market, and find a special corner of the market to satisfy.
Not an owner, but seems to be so to the public.
Quantitative models that focus on observing the patterns of change in the variables over time.
All non-bank loans that are due for payments.
Responsiveness of the change in profits due to the change in sales. It is measured by the degree of operating leverage (DOL).
Planning and control of the process to convert inputs into outputs.
The process of converting inputs into outputs.
Same as economic order quantity (EOQ).
The aggregate cost of all clerical activities, and material related to placing an order.
Developing a hierarchical structure of functions to facilitate performance, minimize waste, and implement the strategic and functional plans.
Set of activities to familiarize the newcomer with the workplace, people, and work culture.
The rate for discounting the future income before interest but after taxes.
Any business entity that is owned by two or more business partners.
Business entities that do not pay business taxes separately but they pass income through to their individual owners.
The expected number of operational years during which the initial investment can be fully recovered.
An organized table containing all possible states of nature, managerial decisions, and their corresponding payoffs.
Amount of capital needed for the production of goods and services to satisfy the minimum demand on the firm's product.
Adapting financial principles and theories to help guide the consumer and household's financial decisions.
Comprehensive process aimed at finding, employing, and keeping the right staff who would help achieve the firm's objectives.
Tiny fund reserved for all the small daily needs for cash such as the cash on delivery (COD) services and postage charges, and the like.
The process and facilities to move the product from production stage to consumption, or from the factory to the hands of consumers.
A systematic process that involves anticipating future events, analyzing their impact on the business performance, and designing the appropriate response to counteract that impact.
A price strategy where a foreign firm lowers its prices much below the domestic industry's prices in an attempt to beat the existing firms and take most of its market share.
It is the market price of a stock divided by the earnings per share. It reflects the investor's confidence in the firm.
The firm's plan for how much it would charge customers for its product in light of its cost, profit, value to consumers, and prices of other competing products.
Data collected specifically in relation to a specific issue. It is a current and direct method and goes right to what the researchers wants to achieve.
Analysis using the pro forma statements as a practical way to predict the feasibility and worth of a firm in the near future.
Financial statement, all the entries of which are projected values.
The company's effort in making the newly invented product available for the general commercial applications.
Obtaining the right to sell a specific product that is exclusively made and distributed by the franchisor.
Using or selling the patented invention that belongs to other firms.
Registered and exclusive right to make, use, or sell a particular product, process, or idea that is new and useful.
The extent to which a product can satisfy its own consumers.
Firms that would produce what they need of inputs to their own production instead of buying them from other sources, or contracting out other firms.
The monetary return to those who initiate and manage the entrepreneurial function of production.
The strategy taken by a firm to ensure that its revenue would exceed its costs so that profits can be made.
The ability of the employed assets to generate profit. It is also the return on assets or on investment.
Series of systematic activities necessary to achieve project goals, especially in turning a business idea into a commercial product or service.
Process to design, initiate, and control all communications with the target customers.
Promotional vehicles such as packaging, branding, couponing, premiums, point-of-purchase displays, and the like.
Knowing the type, size, and method of the right communication with any specific target customers.
The starting process by which a salesperson would put together a list of potential customers who are most likely to buy the product.
All the company's efforts and activities to lift the company's image and values.
An unpaid form of promotion involving information about a product, personnel, management, methods of production, or innovation that is disseminated to the public through the mass media.
Models that examine and interpret observations through the use of non-numerical analysis. They are called judgmental for relying on value judgment.
Complete and continuous commitment to improve all the quality elements and aspects.
Models that utilize historical data and rely on numerical representation of the observations to explain the trends and changes that the observations reflect.
A discount offered by vendors and suppliers for customers who buy large quantities.
A form containing questions to collect data for survey research.
Irregular unpredictable fluctuations that reflect events such as war, political instability, natural disasters, strikes, and the like.
Organizing employees according to the firm's structure of supervision that would determine how many employees would fall under what supervisor.
The firm's effort to reach out and attract a pool of candidates from which the most suitable applicants would be chosen to fill the vacant positions.
The point at which customers would be indifferent about going to either location for shopping.
The point at which an inventory order should be placed. It is expressed by the minimum quantity of an item that remains on the shelf when it is time to order a new batch of the EOQ.
How much it would cost to buy a certain asset today.
The difference between the retail price and wholesale price (the retailer's cost).
The task of gearing the firm's managerial and financial resources toward anticipating and dealing with all potential risks.
The added percentage by which the required discount rate for a risky project exceeds the risk-free rate.
The condition in which there are multiple possible outcomes and the probability of each alternative outcome is either known or can be estimated.
Marketing the IPO to potential investors that are specifically identified by the underwriter bank.
Federal full disclosure guideline called “Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures”.
Marketing ideas and activities that do not fall into personal selling, advertising, or publicity.
A technique similar to the sensitivity analysis, except in extending the randomization of change to more than one variable and tracking down the multiple impacts simultaneously.
Recurring rhythmic fluctuations in certain variables. They reflect certain seasons, weather conditions, or specific periodic occasions such as school time, Christmas, or Thanksgiving.
Data obtained from already existing documents.
An active owner, who chooses not to be known as a partner in the business.
Long-term consistent development in a variable value that is characterized by a steady increasing or decreasing pattern, and represented by a solid smooth, upward or downward line.
Short-term loans that are backed by the firm's collaterals.
A technique to get a general sense of risk in potential business projects using the variability among the outcomes such as the project's future returns and estimated net present values.
An inactive owner, who happened to be not known as a partner in the business.
A thorough mathematical technique that utilizes predetermined probability distributions and random values to assess the state of probable future events.
The portion of a product price that would be given up by the vendor or manufacturer as a discount.
Independently owned and operated entity, which is for profit, but is not dominant in its field. Its size is determined by size of employment or revenue, which varies with the industry.
Any business owned and managed by a single person.
The firm's sources of obligations such as debt owed to suppliers, vendors, and services rendered to the firm, in addition to the accrued payments.
A statement containing all of the expenses incurred to initiate the business and have it up and running.
Brief version to propose a business idea, test its feasibility, and check how marketable the concept is.
Set of possible future conditions that would affect any possible managerial decision.
Quantitative models such as the econometrics model that focus on the dependent–independent relationships between variables.
Corporate tax code created by the United States Internal Revenue Services (IRS) in 1954 to relieve the small corporations from the burden of the double taxation.
Legal document to show who would take over the ownership of the business in case the primary owner dies or becomes incapacitated.
Strengths, Weaknesses, Opportunities, and Threats. It is an evaluation analysis to assess the internal and external determinants of starting up a business venture, although it can be used for any other purposes.
Buyer would purchase enough of the business stock to grant him control over the business board and the decision-making authority in the business.
Those customers who will potentially be the buyers of the firm's product.
Group of consumers who share a lot in terms of what they buy.
Proportion of target customers to all customers.
A legal act to reduce the taxes due using lawful means.
An unlawful act to escape the responsibility of paying taxes through misrepresenting the facts, concealing the evidence, cheating, or submitting false reports.
Capital that may not necessarily be gainfully employed, which makes it fit for seasonal or cyclical production.
An approach for a working capital financing where the firm would pair the permanent financial need with the long-term debt, and the temporary capital need with the short-term borrowing.
An approach for a working capital financing where the firm combines two strategies: the high profit–high risk with the low profit–low risk.
An approach for a working capital financing where the firm finance all its needs at the long-term interest, with no short-term financing but only in special cases.
Five constructs that have been traditionally known to constitute the extent of credit worthiness for individuals: Character, Capital, Capacity, Collateral, and Condition.
Planning, organizing, staffing, directing, and controlling.
Quantitative models that use historical data and apply statistical techniques to obtain predictions of future values.
Ratio of the two values of the firm's total assets, market value, and replacement value.
The firm's capacity to utilize its assets and generate the highest revenue out of them.
Fixed costs plus variable costs.
The dollar value of the product sold.
The proceeds collected out of selling the goods and services produced by the firm.
Certain deduction off the list price of what the firm sells, which is usually offered by the manufacturer to wholesalers and retailers for honoring certain contractual commitment.
Only an association with a specific brand name without any obligation to exclusively sell or distribute that brand name.
Short-term debt obligations issued by the U.S. Department of Treasury as risk-free investment. Sold at auction for a minimum face value of $100 and with maturities of 28, 91, 182, and 364 days. Do not pay interest but they are sold at a discount of their face value.
A long maturity–high yield bond that is issued by the U.S. Department of Treasury.
Different from treasury bills in both maturities and interest. They come with maturities of 1, 3, 5, 7, and 10 years and they pay a stated interest semiannually.
The condition in which there are multiple possible outcomes and the probability of each alternative outcome is either unknown or cannot be estimated.
The legal code for business partnership in the United States.
The firm's obligations such as the commercial banks' line of credit, revolving credit, and the single payment notes.
Costs that are positively related to size of production or sale.
Professional investors who provide funds to promising companies in return of large payback in a short period of time.
Very short expression to summarize what the company is all about and what it would ultimately want to achieve.
A statement containing all the amounts withheld by the payroll office. It is annually provided by employers to their employees to complete their tax filing.
A promise made by a business to consumers on the goodness of a product and its capacity to serve the purpose for which it was made.
Full version, with wide range of topics and significant details to establish and run a business.
The firm's system of assets and liabilities in their current status.
Efficiently maximizing the value of current assets while minimizing the current liabilities in order to balance between profit and risk and optimize the firm's value.
The net present value per dollar as obtained by dividing NPV by the amount invested or the initial capital allocated (I0).