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96 Cards in this Set
- Front
- Back
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average payable period ratio
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measures the # of days it takes a company to pay its accounts payable
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net profit on sales ratio
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measures a company's profit per dollar of sales
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net sales to total assets ratio
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measures a company's ability to generate sales in relation to its asset base
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net sales to working capital ratio
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measures how many dollars in sales a business generates for every dollar of working capital
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profitability ratios
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indicate how efficiently a small company is being managed
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net profit to equity ratio
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measures the owners' rate of return on investment
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variable expenses
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expenses that vary directly with changes in the volume of sales or production
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breakeven point
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the level of operation (sales dollars or production quantity) at which a company neither earns a profit nor incurs a loss
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fixed expenses
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expenses that do not vary with the volume of sales or production
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Operating ratio
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help an entrereneur evaluate a small company's overall performance and indicate how effectively the business employs its resources
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leverage ratios
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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
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operating ratios
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help an entrepreneur evaluate a small company's overall performance and indicate how effectively the business employs its resources
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average inventory turnover ratio
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measures the # of times its average inventory is sold out, or turned over, during an accounting period
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average collection period ratio
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measures the # of days it takes to collect accounts receivable
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multiple pricing
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a technique offering customers discounts if they purchase in quantity
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opportunistic pricing
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a pricing method that involves charging customers unreasonably high prices when goods or services are in short supply
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discounts (markdowns)
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reductions from normal list price
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markup (markon)
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the difference between the cost of a product or service and its selling price
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absorption costing
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the traditional method of product costing in which all manufacturing and overhead costs are absorbed into the product's total cost
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variable (direct) costing
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a method of product costing that includes in the product's cost only those costs that vary directly with the quantity produced
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cash management
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the process of forecasting, collecting, disbursing, investing, and planning for the case a company needs to operate smoothly
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cash flow cycle
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the time lag between paying suppliers for merchandise or materials and receiving payment from customers
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cash flow
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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
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cash budget
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a "cash map," showing the amount and the timing of cash receipts and cash disbursements on a daily, weekly, or monthly basis
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cycle billing
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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
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lockbox
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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
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spam
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unsolicited commercial e-mail
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bartering
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the exchange of goods and services for other goods and services rather than for cash
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balance sheet
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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
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current assets
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assets such as cash and other items to be converted into cash within one year, or within the company's normal operating cycle
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fixed assets
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assets acquired for long-term use in a business
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liabilities
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creditors' claims against a company's assets
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current liabilities
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those debts that must be paid within one year or within the normal operating cycle of a company
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long-term liabilities
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liabilities that come due after one year
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owner's equity
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the value of the owner's investment in the business
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income statement
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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)
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cost of goods sold
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the total cost, including shipping, of the merchandise sold during the accounting period
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gross profit margin
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gross profit divided by net sales revenue
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operating expenses
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those costs that contribute directly to the manufacture and distribution of goods
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statement of cash flow
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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
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ratio analysis
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a method of expressing the relationship between any two accounting elements that allows business owners to analyze their companies' financial performances
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liquidity ratios
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tell whether a small business will be able to meet its short-term obligations as they come due
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current ratio
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measures a small firm's solvency by indicating its ability to pay current liabilities out of current assets
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quick ratio
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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
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leverage ratios
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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
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debt ratio
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measures the percentage of total assets financed by a company's creditors compared to its owners
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debt to net worth ratio
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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 |
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times interest earned ratio
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measures a small firm's ability to make the interest payments on its debt
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unique selling proposition (USP)
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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?"
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promotion
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any form of persuasive communication designed to inform consumers about a product or service and to influence them to purchase these goods or services
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publicity
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any commercial news covered by the media that boosts sales but for which the small business does not pay
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personal selling
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the personal contact between salespeople and potential customers resulting from sales efforts
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advertising
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any sales presentation that is nonpersonal in nature and is paid for by an indentified sponsor
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audience
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a measure of the number of paid subscribers a particular medium attracts
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reach
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the total number of people exposed to an ad at least once in a period of time, usually four weeks
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frequency
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the average number of times a person is exposed to an ad in a period of time
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absolute cost
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the actual dollar outlay a business owner must make to place an ad in a particular medium for a specific period of time
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cost per thousand (CPM)
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the cost of an ad per 1,000 customers reached
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word-of-mouth advertising
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advertising in which satisfied customers recommend a business to friends, family members, and acquaintances
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zappers
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television viewers who flash from one channel to another, especially during commercials
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infomercials
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a full-length television commercial packed with information, testimonials, and a sales pitch
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banner ads
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small, rectangular ads that reside on Web sites, mcuh like roadside billboards, touting a company's product or service
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impression
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occurs every time an ad appears on a Web page, whether or not the user clicks on it
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e-mail advertising
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advertsing in which companies broadcast their advertising messages via e-mail
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click-through rate
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a value calculated by dividing the # of times customers actually click on a banner ad by the # of impressions for that ad
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cookies
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small programs that attach to users' computers when they visit certain web sites and that track users' web browsing patterns
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full-page ads
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ads taht download to users' web screens before they can access certain web sites
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push technology ads
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ads that appear on users' screens when they download information such as news, sports, or entertainment from another site
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permission e-mail
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commercial e-mail sent to customers with their consent
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Marketing
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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.
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guerrilla marketing strategies
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unconventional, low-cost, creative marketing techniques that allow small companies to compete effectively with larger rivals.
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entertailing
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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
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demographics
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the study of important population characteristics such as age, income, education, race, and others
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market research
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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
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individualized (one-to-one) marketing
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a system based on gathering data on individual customers and developing a marketing program designed to appeal specifically to their needs, tastes, and preferences
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data mining
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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
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taget market
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the specific group of customers at whom a company aims its goods or services
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relationship marketing
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the process of developing and maintaining long-term relationships with customers so they will keep coming back to make repeat purchases
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revenue at risk
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a measure that calculates the sales revenue a company would lose by measuring the percentage of customers who would leave because of poor service
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total quality management (TQM)
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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
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time compression management (TCM)
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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
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World Wide Web (WWW)
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the vast network that links computers around the globe via the Internet and opens up endless oceans of information to its users
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Web site
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the electronic storefront of a company on the World Wide Web; its exact location is defined by the site's Universal Resource Locator
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product life cycle
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describes the stages of development, growth, and decline in a product's life
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introductory stage
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the stage in which a product or service must break into the market and overcome customer inertia
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growth and acceptance stage
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the stage in which sales and profits materialize
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maturity and competition stage
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the stage in which sales rise, but profits peak and then fall as competitors enter the market
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market saturation stage
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stage in which sales peak, indicating the time to introduce the next-generation product
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product decline stage
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the stage in which sales continue to fall and profit margins decline drastically
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cooperative advertising
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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
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shared advertising
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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
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cause marketing
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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
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leader pricing
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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
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zone pricing
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a technique that involves setting different prices for customers located in different territories because of different transportation costs
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delivered pricing
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a technique in which a company charges all customers the same price, regardless of their locations and different transportation costs
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FOB- Factory
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a pricing method in which a company sells merchandise to customers on the condition that they pay all shipping costs
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