Idis 240 Exam 2

Front 1

CashFlow:

Back 1

· Cash inBank -> Purchased Inventory -> Sold inventory -> Accounts receivable-> Cash in Bank.

· Lesserthe cash flow cycle, lesser cash is required to finance the business.

Front 2

Pricing: (dependent on)

Back 2

What manufacturer wants.

--greatly influence by marketplace.

--·Supplieranalyses the market and pays for the product to the manufacturer.

Trade discounts are how the distributor is paidfor his services to manufacturer and the customer.

Front 3

Markup

Back 3

Themoney that distributor adds to the cost of goods sold.

Markup = Selling Price – COGS

Front 4

Note

Back 4

PercentMarkup and Percent Gross margin yield the same dollar value but they arecalculated differently.

Front 5

Operating Expenses

Back 5

Includesall cost necessary to provide the

necessary services

Examplesare Warehouse cost,

inventory holding cots, transportation cost

Front 6

Selling, General and Administrative Expense(SG & A):

Back 6

Includesbut not limited to Salaries, Payroll costs, travel, entertainment cost

Front 7

Earnings beforeInterest, Taxes, Depreciation and Amortization (EBITDA

Back 7

namesuggests, it is the earnings before interest, taxes, depreciation and amortization.

Front 8

Depreciation and Amortization (D&A):

Back 8

Expensecaptures the reduction in values of assets over time. Example: reduction of valueof truck due to wear and tear

Front 9

Interest Expense (I):

Back 9

·Costpaid to borrow money·

Not apart of Operating Expenses

Front 10

Net Profit

Back 10

Net Profit before Tax (NPBT) = EBIT – Interest

NetProfit after Tax (NPAT) = NPBT – Taxes

Front 11

Accounts Payable:

Back 11

·Moneythat the distributors owe the

manufacturers for the products purchased ·

Usuallyit’s an interest free debt·

Loses acash discount, damages credit ratings or loses favor with other companies

Front 12

Days Receivables:

Back 12

· Moneythat the customers owe the

distributors for the products purchased ·

Usuallyit’s an interest free debt

Front 13

Inventory:

Back 13

Distributor’s inventory is made of items purchased, broughtinto warehouse and held on hand

Front 14

InventoryTurn

Back 14

Oneproduct purchase -> inventory -> sold -> Money Collected -> Anotherproduct purchased = One Inventory Turn

(Dropshipment sales and Cross-docked shipments should not be included in inventoryturn calculation.)

Front 15

DropShipments

Back 15

Shipmentsdelivered directly to job site

Front 16

Cross-docked Shipments

Back 16

Items were transported across dock to the job’s site on thesame day or next day.