Mangrl Acct Quiz

Front 1

Strategic planning

Back 1

- the process of deciding on an organization’s major programs (e.g., product lines, R&D) and the approximate resources devoted to them

Front 2

Capital investments

Back 2

- capital investment decisions are a product of strategic planning

- require substantial monetary commitments and should generate long-term profits

Front 3

replacements and minor improvements

Back 3

- replacements of existing long-lived assets that wear out or become obsolete

- managers should investigate alternatives for replacing the asset and consider cost, efficiency, and time

Front 4

expansion

Back 4

due to excess demand or to serve new customers in current markets

Front 5

strategic moves

Back 5

- expansion to move into new markets geographically or with new products/services

- due to increased risk, top management may access market studies, outside consultants, industry experts, etc.

- can result from changes in market condition, from product innovations, or from organizational planning activities

Front 6

Due diligence

Back 6

-a legal term for the appropriate steps in an investigation
-consider:
legal repercussions
environmental issues)
public relations issues
employee relations
-managers should also consider non-quantifiable benefits from experience gained

Front 7

The role of audits

Back 7

-interim audits can reveal problems and provide information for future decisions

Front 8

Ethical issues

Back 8

- top managers should be wary of misstated information used to make the investment decision, misstated results, and should consider the ethics of the project

Front 9

Financial information for making investment decisions

Back 9

o from: (1) financial records (if historical information from similar past decisions exists), (2) operating personnel (e.g., production activities and costs) and marketing personnel (e.g., competition and demand),
(3) publicly-available industry data and competitor analysis (e.g., company and industry web sites, corporate financial statements)

Front 10

Discounted cash flow analysis

Back 10

-consider the timing of cash flows because of the time value of money

-the discount rate should be the cost of capital, adjusted to reflect uncertainty or risk

-high-tech projects may be rejected because greater uncertainty makes the discount rate high or because the payback period is too long

- also consider the non-quantifiable factors (e.g., flexibility in the production process, shorter cycle times, reduced lead times, increased product quality)

Front 11

Sensitivity analysis

Back 11

-consider outcomes from changing assumptions

-consider a worst-case scenario, a best-case scenario, and scenarios in between these outcomes

Front 12

Real option value – ROV

Back 12

- helps to assess the impact of external factors, especially potential competition, in project evaluation

- assess scenarios for the costs and benefits of continuing with the project versus abandoning it at certain points in the future

Front 13

Capital investment decisions in non-profit and government organizations

Back 13

-analysis is required not to make a profit but because capital is generally limited

Front 14

A budget

Back 14

a detailed plan used:

1.For planning

2.To facilitate communication and coordination among managers and departments

3.For performance evaluation

Front 15

Short-range budgets

Back 15

cover a month, quarter, or year

Front 16

Rolling (or revolving or continuous) budgets

Back 16

are continuously updated

Front 17

The master budget

Back 17

is a comprehensive set of budgets covering all phases of an organization’s operations.

- is the main output of a budget system

- is comprised of many separate, interdependent budgets

Front 18

i)The sales budget

Back 18

projected sales in units x price = projected sales revenue

- may be shown by month or quarter