Operating A Business Test 3 Flashcards Preview

Uncategorized > Operating A Business Test 3 > Flashcards

Flashcards in Operating A Business Test 3 Deck (54)
Loading flashcards...
1

Uneventful protection for a small business or small business owner
in regards to monetary compensation in the event that a business &/or
personal peril is experienced.

Insurance

2

Identify business risk to be...

covered

3

obtain coverage for...

major potential
losses.

4

Insurance Planning (Risk to consider)

Loss / Damage to property
Vehicles / rolling stock
Loss of income resulting from business interruption
Burglary / Robbery
Extensive loss from bad debts
Liability to employees
Financial hardship
Liability to public
shoplifting / loss through dishonest employees
Death of Key employees
Riots / Civil disobedience

5

life insurance that protects a firm against losses
due to the death of a key person.

Key Person Insurance

6

insurance on a owner that will supply money for a
partner to buy his share upon death

Buy – sell Insurance

7

examples of insurance (including but not limited to)

Key-Person Insurance
Buy-Sell Insurance

8

Protects financial losses
incurred by producers / sellers of goods or services due to injury or damage
resulting fro use of said product.

Product Liability / Malpractice Insurance

9

insurance that provides monetary benefits to a
business that has experienced an unforeseen peril such as a flood or fire.

Casualty Insurance

10

Types of insurance

Product Liability / Malpractice Insurance
Whole Life
Casualty Insurance
Universal Life
Term Life Insurance

11

buy for a period of time, dissolves at end of time
period unless renewed.

Term Life Insurance

12

Refers to efforts designed to preserve assets and earning power associated with a business

Risk Management

13

Risk Management Considerations

Eliminate risks
Minimize risks
Shift the risk
Absorb the risk

14

remove the cause (security and/or neighborhood
watch.

Eliminate Risk

15

good management (morale, pricing, promotions).

Minimize Risks

16

purchase outside insurance.......to cover the business in regards to monetary compensation in the event that peril is experienced. . . . . business or personal.

Shift the Risk

17

Percentages of earnings as a
contingency for possible future losses; (property, workers comp. medical).

Absorb the risk (sole insurance)

18

Those, over a relevant range, which do not change but becomes progressively smaller on a per-unit basis as volume increases.

Likewise, these do not decrease with increased business, nor do they decrease with declining business activity.



Fixed Expenses

19

Fixed Expenses - examples:

Rent
Salaries
Depreciation
Insurance
Debt

20

That cost which is uniform per unit but fluctuates in
total in direct proportion to change in the related activity or volume.



Variable Expenses

21

Variable Expenses - example:

Supplies - pins, paper, etc.
Hourly wage expense
Repairs
Utilities
Taxes

22

Any cost not specifically associated with production of identifiable products and services. The cost to open the doors.

.

Overhead

23

The point at which total sales revenue equals total cost.


Break even point

24

Break Even Point may also be referred to as...

break even analysis

25

Expense Classification is usually based on the industry standard.

Cost Control

26

likewise compared to the industry standard. Best defined as profit on each item of expense in the income statement expressed as a percentage
of sales income.


Operating Ratios

27

Examples of Ratio Utilization

Total operating expense ratio.
Net worth -
Gross -
Employee wage ratio.
Proprietor’s wage.
Advertising expense.

28

before deductions.

gross

29

after deductions.

net worth

30

people who are willing to invest in a risky business

Angels