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41 Cards in this Set
- Front
- Back
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Enterprise Budgets |
Used to estimate cost of production |
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Three C's of financial analysis |
Compare Common Size Change |
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Differentiated strategic positions would suggest what? |
Higher contribution margins to fixed costs than low-cost leader strategies |
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Principle functions of financial statements - Income Statements: |
Show the flows of revenues and expenses through the business. Documenting the brigress throughout the year |
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Principle Functions of Financial Statements - Balance Sheets: |
Show the overall resources invested in the firm, including what is owned and what is owed. |
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How do Income Statements and Balance Sheets relate? |
The net income from the income statement is what is uses to adjust the equity or earth of the firm in the balance sheet from one year to the next, changes in inventories, accounts payable/receivable prepaid expenses, and accrued interest are used to adjust revenues and expenses on the income statement. |
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Strategic Positions? |
Low-Cost Leader (WalMart) Differentiation (Harley Davidson) Coordination (Ebay) Customization (custom home builder) |
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Technical Efficiency |
Using the best management practices to increase yields or output, lower costs, and use operating profit margin to show good returns per unit |
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Scale Efficiency |
Do you make enough sales to justify resources, which would lead to a higher Activity or Turnover Ratio |
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What are the 4 categories of financial ratios? |
Liquidity Solvency Efficiency Profitability |
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Liquidity |
How well you can pay bills |
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Solvency |
If you can cover all debt obligations over time |
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Efficiency |
If you use firm resources to create sufficient revenues |
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Profitability |
If, after paying expenses, you are able to create profits/returns from operations |
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Break Even equation (Q) |
Break even = fixed cost/(price - variable cost) |
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SWOT analysis |
Strength Weakness Opportunities Threats |
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Types of Planning? |
Strategic Tactical Contingency |
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Strategic Planning? |
Defines Culture of Business -brand image -resource needs and goals |
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Tactical Planning? |
Day to day operations -consistent with strategic mission -goals narrowly related to process |
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Contingency Planning?
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Managing uncertainty and future driving forces |
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Long Term Business Goals are? |
Directional Reasonable Inspiring Visible Eventual |
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Short Term Business Goals are? |
Specific Measurable Attainable Rewarding Timed |
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Porter's 5 Forces |
Bargaining Power of Suppliers Bargaining Power of Buyers Threat of New Entrants Industry Competitors Thread of Substitute Products or Services |
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Comparative Analysis |
Side by side comparison observation |
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Change Analysis |
Net the new financial entries from the old. what is the change? ex: percentages... looking at "assets when up 15%" |
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Common Size |
Levels the field of analysis by converting all entries to a percentage of a common base Balance Sheet: divide by total assets Income Statement: divide by total sales |
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Four Basic Categories of Ratios |
Liquidity Ratios Solvency or Leverage Ratios Activity Ratios Profitability Ratios |
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Liquidity Ratio |
Assess the ability of the firm to cover current obligations |
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Solvency or leverage ratios |
Assess the ability of the firm to cover long term debt obligations |
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Activity (Turnover Ratios) |
Assess the volume of business activity relative to the amount of resources used by the firm |
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Profitability Ratio |
Assess the profits of the firm relative to the amount of resources used by the firm |
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Liquidity Ratios: |
Current Ratio |
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Current Ratio |
Current Assets / Current Liabilities |
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Working Capital |
Current Assets - current Liabilites |
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Solvency and Leverage Ratios |
Debt to Asset Ratio Coverage Ratio |
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Debt to Asset Ratio |
Total Liabilities / Total Assets |
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Coverage Ratio |
Operating Income / Interest Expense |
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Contribution Margin |
How you come up with the break-even price depending on sales |
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Technical Efficiency |
using the best management practices to increase yields or output, lower costs, use operating profit margin to show good returns per unit |
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Scale Efficiency |
Do you make enough sales to justify resources, which would lead to a higher Activity orTurnover Ratio |
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