Flashcards in Definitons Deck (68):

1

## Ansoff's Matrix

### An analytical tool that considers risk and the potential reward from strategic options.

2

## Acid Test

### Liquid Assets / Current Liabilities

3

## Asset Turnover

### Revenue / Net Assets

4

## Average Rate of Return

###
1. Net cash flow / N.O years = Average Annual Profit

2. (Annual profit / initial investment) x 100

5

## Current Ratio

### Current Assets / Current Liabilities, expressed as x:1

6

## Dividend per Share

### Total Dividends / Number issued, expressed in pence per share

7

## Dividend Yield

### (Ordinary Share Dividend (in pence) / Current Market Price) x 100

8

## Gearing

### (Non Current Liabilities / (Total equity + non current liabilities)) x 100

9

## Gross Profit

### Sales Revenue - Cost of sales

10

## Inventory Turnover

### Cost of Sales / Average inventory held

11

## Market Share

### (Sales of a Firm / Total Market Sales) x 100

12

## Moving Averages (3 point moving average)

###
Add 1,2,3 divide by 3

Add 2,3,4 divide by 3

Add 3,4,5 deivide by 3

Continue until the last number is included in a set of 3

13

## Net Assets

### Non-Current Assets + Current Assets - Current Liabilities - Non current Liabilities

14

## Net Current Assets/Liabilities

### Current Assets - Current Liabilities.

15

## Net Present Value

###
-Net Cash flow Table

-Multiply each years net cash flow by the discount factor year 0 is multiplies by 1

-Add all the net values including the negative for year 0

16

## Net Profit Margin

### (Operating profit (net profit) / Sales Revenue) x 100

17

## Payable Day's

### Payable x 365 / Cost of Goods Sold

18

## Payback

###
1. Net cash flow Table

2. Cumulative to identify when investment is covered

3. ÷ amount paid in last year by net cash flow same year

4. Times figure in step 3 by 12 to get monthly.

19

## Receivables

### Receivables x 365 / Revenue (in days)

20

## ROCE

### Operating Profit / Total equity + Non Current Liabilities.

21

## Working Capital

### Current Assets - Current Liabilities

22

## Asset Turnover Def

### Measures how the assets of the business are being utilise to generate revenue.

23

## Acid Test Def

### A measure of a firm's short term survival i.e its ability to meet short term debts and day to day expenses.

24

## Average Rate of Return Def

### An investment appraisal technique that calculates average profit as a percentage of the total cost of the initial investment.

25

## Current Ratio Def

### A measure of a firm's liquidity and short term survival i.e its ability to meet short term debts and day to day expenses

26

## Dividend per Share Def

### The return paid to the shareholders for each unit of their investment.

27

## Dividend Yield Def

### Measures the return on a shareholder's investment as a percentage of the current market price.

28

## Float Time Def

### The amount of extra time available to complete a non critical activity without delaying the project.

29

## Gearing Def

### A measure of the proportion of a business's capital that is funded through long term loans.

30

## Gross Profit Def

### Profit after cost of sales has been deducted and before expenses.

31

## Inventory Turnover Def

### Measures how efficiently a business replaces its stock in a year and hence whether stock is being used efficiently to generate sales.

32

## Moving Averages Def

### A method of market analysis which shows whether a trend is significant by smoothing out fluctuations.

33

## Net Assets Def

### The net worth of a business by the balancing of assets against liabilities.

34

## Net Current Assets/Liabilities Def

### The difference between Current Assets and Current Liabilities.

35

## Net Present Value Def

### An investment appraisal technique that calculates the total return on an investment taking into account the time value of money.

36

## Net Profit Margin Def

### A measure of Profitability that looks at operating profit as a percentage of sales revenue.

37

## Payable Day's Def

### Measures how long on average it takes a business to pay its suppliers it has purchased on credit.

38

## Payback Def

### An investment appraisal technique that measures how long it would take to pay back the cost of the initial investment.

39

## Receivable Days Def

### A measure of how long it takes a customer to pay for credit purchases.

40

## ROCE Def

### A measure of how efficiently a business is using its capital employed to generate profit.

41

## Working Capital Def

### A measure of a firms liquidity / ability to meet day to day expenses.

42

## Centralisation

### The responsibility of decision making it made by the few individuals at the top of the hierarchy.

43

## Corporate Objective

### Long term goals of a business which determines its guiding principles.

44

## Cost Centre

### A financial strategy where costs are attributed to different sections of the business.

45

## CPA

### A process which decides which tasks can be completed simultaneously and the order in which they need to be completed.

46

## Decentralisation

### The responsibility of decision making is delegated to middle managers in the hierarchy.

47

## Delayering

### A cost saving strategy that removes levels in the hierarchy.

48

## Differentiation (Porter)

### The ability to provide a product or service that stands out from the competition.

49

## Diseconomies of Scale

### Increasing the scale of production that leads to increasing unit costs.

50

## Diversification

###
Where companies aim to provide :

NEW PRODUCT

NEW MARKET

51

## Dividend

### A share of profit paid to the shareholder as a reward for their investment.

52

## Economies of Scale

### Increasing the scale of production that leads to falling unit costs.

53

## Functional Objectives

### Medium to Long term goals of departments e.g Marketing/Finance which help achieve the corporate objective.

54

## Hard HR

### Employees are treated as a resource that need to be managed to control costs and output.

55

## Investment Appraisal

### Techniques that analyse the predicted financial outcomes of potential investments.

56

## J-I-T

### Ordering materials just before they are needed. Lower storage / wastage costs. Suppliers are nearby and are flexibility / reliability. Late delivery could be costly.

57

## Kaizen

### Continuous improvement - employees make suggestions for small-scale improvements. Provides motivation for employees given power / opportunity to increase efficiency

58

## Low Cost Strategy (Porter)

### When businesses provide goods/services at lower costs than their competitors.

59

## Market Development (Porter)

### Where the businesses puts existing products into new markets.

60

## Product Development (Porter)

### Where the businesses puts new products in existing markets.

61

## Market Penetration (Porter)

### Where the businesses puts existing products into existing markets.

62

## Operational Objectives

### Targets of which help the business to produce goods/services in the most effective way.

63

## Porters Generic Strategy

### Marketing Strategies that a business can adopt in order to achieve a comparative advantage.

64

## Soft HR

### Employees are regarded as an asset and can help the business achieve its long term targets.

65

## TQM

### An approach where each employee in the chain puts quality first and treats the next link like an external customer.

66

## Lean Production

### Working practices that focus on removing waste, whilst maintaining or improving quality.

67

## Stakeholders

### A group or individual that has a vested interest in a firm

68