Reinforce Terms & Topics Flashcards
(47 cards)
What pair of stocks will create the portfolio with the LEAST risk ?
Those stocks that are NEGATIVELY correlated.
Return of Investment ROI Formula
Net Income / investment capital (average)
Pareto Diagram
Cumulative frequency of quality issues, problems & defects
What can cause a demand curve to move to the LEFT?
A price increase in a complementary commodity
JIT (Just in Time system)
Lower inventory levels. If Carrying cost are increasing, JIT is beneficial
Cloud Computing
Virtual Servers access from anywhere using the internet
Lean Manufacturing
focus on Waster Reduction not Quality
DSS System (Decision Supporting System)
type of MIS system, is a “what if” system it helps to make decisions. Forecasting
System Steering Committee
Review and Approve long range projects. Oversight of system development and acquisition.
The Steering Committee does not communicate with end users
Hot site
Backup Facility that contains most of the original equipment from the computer center
MIS (Management Information System) has 3 subsystem
- AIS (accounting information system)
- DSS (decision supportive system)
- EIS (Executive Information System)
Contribution Margin Formula
Sales - Variable Cost
Balance Scorecards
Provides performances on various aspect of an organization
Cost of Debt Formula
Pretax Rate (Interest Rate) x (1-Tax Rate)
Organizational sustainability
Ability of an entity to withstand impact of large-scale risk events
Opportunity Cost
Is the the maximum benefit foregone. Benefit provided by the next best thing.
Risk Averse
Behavior that demand more return on a investment. Managers expect to be compensated for increased risk.
Expected Growth Formula
Multiply each estimated by the probability to get the % growth.
Activity-Based Costing
It can be used in Process and Job Costing.
Eliminating nonvalue-adding activities would reduce cost (objetives of ABC)
Inventory Turnover Formula
COGS / Average Inventory (Change of inventory divided by 2)
Residual Income Formula
Net Income - Required Return*
*Required Return = Net Book Value (Equity) x Hurdle Rate
Economic-Added Value is Residual Income Technique used for Capital Budgeting and Performance Evaluation
Prime Cost Formula
Direct Material (BASE) & Direct Labor
BASE acronym
B = Beginning Balance
A = Add (Purchases, Transportation In)
S = Subtract (Return and Allowances)
E = Less Ending Balance
Net Present Value NPV Formula
Es la diferencia entre inflows and outflows
- Annual Net Cash Flow Amount (el Yield amount que tendra al futuro) X Present Value of Annuity (los decimales dados)
- Cash Flow al ultimo año X Present Value de ese ultimo año (decimales)
- Outflow (Investment outflow $) X Discount Factor (Today = 1.0)
If NPV is positive it would indicate that the IRR > than the Hurdle Rate
focused on dollar amount instead of percentages like IRR
