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96 Cards in this Set

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  • Back
average payable period ratio
measures the # of days it takes a company to pay its accounts payable
net profit on sales ratio
measures a company's profit per dollar of sales
net sales to total assets ratio
measures a company's ability to generate sales in relation to its asset base
net sales to working capital ratio
measures how many dollars in sales a business generates for every dollar of working capital
profitability ratios
indicate how efficiently a small company is being managed
net profit to equity ratio
measures the owners' rate of return on investment
variable expenses
expenses that vary directly with changes in the volume of sales or production
breakeven point
the level of operation (sales dollars or production quantity) at which a company neither earns a profit nor incurs a loss
fixed expenses
expenses that do not vary with the volume of sales or production
Operating ratio
help an entrereneur evaluate a small company's overall performance and indicate how effectively the business employs its resources
leverage ratios
measure the financing supplied by a firm's owners against that supplied by its creditors; they are a gauge of the depth of a company's debt
operating ratios
help an entrepreneur evaluate a small company's overall performance and indicate how effectively the business employs its resources
average inventory turnover ratio
measures the # of times its average inventory is sold out, or turned over, during an accounting period
average collection period ratio
measures the # of days it takes to collect accounts receivable
multiple pricing
a technique offering customers discounts if they purchase in quantity
opportunistic pricing
a pricing method that involves charging customers unreasonably high prices when goods or services are in short supply
discounts (markdowns)
reductions from normal list price
markup (markon)
the difference between the cost of a product or service and its selling price
absorption costing
the traditional method of product costing in which all manufacturing and overhead costs are absorbed into the product's total cost
variable (direct) costing
a method of product costing that includes in the product's cost only those costs that vary directly with the quantity produced
cash management
the process of forecasting, collecting, disbursing, investing, and planning for the case a company needs to operate smoothly
cash flow cycle
the time lag between paying suppliers for merchandise or materials and receiving payment from customers
cash flow
a method of tracking a company's liquidity and its ability to pay its bills and other financial obligations on time by tracking the flow of cash into and otu of th business over a period of time
cash budget
a "cash map," showing the amount and the timing of cash receipts and cash disbursements on a daily, weekly, or monthly basis
cycle billing
a method in which a company bills a portion of its credit customers each day of the month in order to smooth out uneven cash receipts
an arrangement in which customers send payments to a post office box a company's bank maintains; several times a day, the bank collects paymnets and deposits them in the company's account
unsolicited commercial e-mail
the exchange of goods and services for other goods and services rather than for cash
balance sheet
a financial statement that provides a snapshot of a business's financial position, estimating its worth on a given date; its is built on the fundamental accounting equation: Assets = Liabilites + Owner's equity
current assets
assets such as cash and other items to be converted into cash within one year, or within the company's normal operating cycle
fixed assets
assets acquired for long-term use in a business
creditors' claims against a company's assets
current liabilities
those debts that must be paid within one year or within the normal operating cycle of a company
long-term liabilities
liabilities that come due after one year
owner's equity
the value of the owner's investment in the business
income statement
a financial statement that represents a "moving picture" of a business, comparing its expenses against its revenue over a period of time to show its net profit (or loss)
cost of goods sold
the total cost, including shipping, of the merchandise sold during the accounting period
gross profit margin
gross profit divided by net sales revenue
operating expenses
those costs that contribute directly to the manufacture and distribution of goods
statement of cash flow
a financial statement showing the changes in a company's working capital from the beginning of the year by listing both the sources and the uses of those funds
ratio analysis
a method of expressing the relationship between any two accounting elements that allows business owners to analyze their companies' financial performances
liquidity ratios
tell whether a small business will be able to meet its short-term obligations as they come due
current ratio
measures a small firm's solvency by indicating its ability to pay current liabilities out of current assets
quick ratio
a conservative measure of a firm's liquidity, measuring the extent to which its most liquid assets cover its current liabilities; quick assets divided by current liabilities
leverage ratios
measure the financing supplied by a firm's owners against that supplied by its creditors; they are a gauge of the depth of a company's debt
debt ratio
measures the percentage of total assets financed by a company's creditors compared to its owners
debt to net worth ratio
expresses the relationship between the capital contributions from creditors and those from owners and measures how highly leveraged a company is;
Total debt (or liabilities) divided by Tangible net worth
times interest earned ratio
measures a small firm's ability to make the interest payments on its debt
unique selling proposition (USP)
a key customer benefit of a product or service that sets it apart from its competition; it ansers the customer's question: "What's in it for me?"
any form of persuasive communication designed to inform consumers about a product or service and to influence them to purchase these goods or services
any commercial news covered by the media that boosts sales but for which the small business does not pay
personal selling
the personal contact between salespeople and potential customers resulting from sales efforts
any sales presentation that is nonpersonal in nature and is paid for by an indentified sponsor
a measure of the number of paid subscribers a particular medium attracts
the total number of people exposed to an ad at least once in a period of time, usually four weeks
the average number of times a person is exposed to an ad in a period of time
absolute cost
the actual dollar outlay a business owner must make to place an ad in a particular medium for a specific period of time
cost per thousand (CPM)
the cost of an ad per 1,000 customers reached
word-of-mouth advertising
advertising in which satisfied customers recommend a business to friends, family members, and acquaintances
television viewers who flash from one channel to another, especially during commercials
a full-length television commercial packed with information, testimonials, and a sales pitch
banner ads
small, rectangular ads that reside on Web sites, mcuh like roadside billboards, touting a company's product or service
occurs every time an ad appears on a Web page, whether or not the user clicks on it
e-mail advertising
advertsing in which companies broadcast their advertising messages via e-mail
click-through rate
a value calculated by dividing the # of times customers actually click on a banner ad by the # of impressions for that ad
small programs that attach to users' computers when they visit certain web sites and that track users' web browsing patterns
full-page ads
ads taht download to users' web screens before they can access certain web sites
push technology ads
ads that appear on users' screens when they download information such as news, sports, or entertainment from another site
permission e-mail
commercial e-mail sent to customers with their consent
the process of creating and delivering desired goods and services to customers and involves all of the activities associated with winning and retaining loyal customers.
guerrilla marketing strategies
unconventional, low-cost, creative marketing techniques that allow small companies to compete effectively with larger rivals.
a marketing concept designed to draw customers into a store by creating a kaleidoscope of sights, sounds, smells, and activities, all designed to entertain - and, of course, sell
the study of important population characteristics such as age, income, education, race, and others
market research
the vehicle for gathering the information that serves as the foundation for the marketing plan; it involves systematically collecting, analyzing, and interpreting data pertaining to a company's market, customers, and competitors
individualized (one-to-one) marketing
a system based on gathering data on individual customers and developing a marketing program designed to appeal specifically to their needs, tastes, and preferences
data mining
a process in which computer software that uses statistical analysis, database technology, and artificial intelligence finds hidden patterns, trends, and connections in data so that business owners can make better marketing decisions and predictions about customers' behavior
taget market
the specific group of customers at whom a company aims its goods or services
relationship marketing
the process of developing and maintaining long-term relationships with customers so they will keep coming back to make repeat purchases
revenue at risk
a measure that calculates the sales revenue a company would lose by measuring the percentage of customers who would leave because of poor service
total quality management (TQM)
the philosophy of producing a high-quality product or service and achieving quality in every aspect of the business and its relationship with the customer; the focus is on continuous improvement in the quality delivered to customers
time compression management (TCM)
a philosophy of introducing speed into a company that involves three aspects: (1) speeding new productsto market, (2) shortening customer response time in manufacturing and delivery, and (3) reducing the aministrative time required to fill an order
World Wide Web (WWW)
the vast network that links computers around the globe via the Internet and opens up endless oceans of information to its users
Web site
the electronic storefront of a company on the World Wide Web; its exact location is defined by the site's Universal Resource Locator
product life cycle
describes the stages of development, growth, and decline in a product's life
introductory stage
the stage in which a product or service must break into the market and overcome customer inertia
growth and acceptance stage
the stage in which sales and profits materialize
maturity and competition stage
the stage in which sales rise, but profits peak and then fall as competitors enter the market
market saturation stage
stage in which sales peak, indicating the time to introduce the next-generation product
product decline stage
the stage in which sales continue to fall and profit margins decline drastically
cooperative advertising
an arrangement in which a manufacturing company shares the cost of advertising with a small retailer if the retailer features its products in those ads
shared advertising
an arrangement in which a group of similar businesses forms a syndicate to produce generic ads that allow the individual businesses to dub in local information
cause marketing
an arrangement in which a small business sponsors and promotes fund-raising activities of nonprofit groups and charities while raising its own visibility in the community
leader pricing
a technique that involoves marking down the normal price of a popular item in an attempt to attract more customers who make incidental purchases of other items at regular prices
zone pricing
a technique that involves setting different prices for customers located in different territories because of different transportation costs
delivered pricing
a technique in which a company charges all customers the same price, regardless of their locations and different transportation costs
FOB- Factory
a pricing method in which a company sells merchandise to customers on the condition that they pay all shipping costs