Business Review

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Business Review
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  1. EPS
    Earnigs Per Share

    • Net Income
    • Total Shares
  2. Total Debt-to-total Assests ratio
    • Total Debt
    • Total Assets
  3. P/E
    Price Per Earnings

    • Market Value
    • Earnings Per Share (EPS)
  4. Current Ratio
    • Current Assets
    • Current Liabilities
  5. Quick Ratio
    • Current Assets (minus inventory)
    • Current Liabilities
  6. Leverage
    How big of a company the managers have created using the owners investments

    • Leverage =       Total Assets
    •                   Total Owners Equity
  7. If you sell products on credit, how is that transaction recorded
    Accounts Recievable
  8. What is the Inventory Turnover Rate and how is it measured?
    • Cost of Goods Sold
    •        Inventory

    Helps determine optimal amounts of product to keep in your inventory
  9. What does Earnings per Share (EPS) measure
    EPS measures how much profit the company makes per share of stock

    • EPS =       Net Income
    •              Number of Shares
  10. Book Value
    Total Owners Equity divided by the number of shares outstanding
  11. What are Dividends
    Cash payment of profits to owners. Declared on  a "per share" basis  ($2.00 a share)
  12. Four Conditions for the Private Enterprise System
    • 1) Right to Private Property
    • 2) Right to keep profits
    • 3) Freedom of Choice
    • 4) Fair Competition
  13. Real Property
    Real Estate and everything attached to it
  14. Personal Property
    Property other than real estate
  15. Intellectual Property
    Property generated by a persons creative activities
  16. Fair Competition prevents businesses from:
    • 1) Monopolizing Markets (Sherman Antitrust Act) ((railroad))
    • 2) Price discrimination, tying and exclusive agreements that substantially lessen competition (Clayton Act)
  17. What must be contained in a contract?
    Elements
  18. What 3 elements must be in a contract for it to be legitimate
    • 1) Voluntary Agreement (acceptance made freely and voluntarily)
    • 2) Consideration (Must involve something of economic value... money, goods, services.. so consideration is just another word for money
    • 3) Contractual Capacity (Both Parties must have legal ability to enter into the contract.
  19. What are some things that will prevent people from entering into a legal contract? (Think Contractual Capacity)
    • 1) Under 18
    • 2) Mentally Unstable
    • 3) Mentally Incapable
    • 4) Insane
    • 5) Intoxicated
  20. What are the 3 Sources of Law?
    • 1) Statutory Law
    • 2) Common Law
    • 3) Administrative Law
  21. What are Statutory Laws?
    Written Laws established by federal, state, county or city governments
  22. What are Common Laws?
    Unwritten Laws that are established by judicial decisions; such law in the United States was inherited from English Law
  23. What are Administrative Laws?
    Regulations established by administrative agencies
  24. What are the two forms of disputes? Who do they take place between?
    • 1) Disputes between an individual and the Government
    • 2) Disputes between two individuals (*individuals can be any form of private party and can include businesses)
  25. What are the differences betweeen Arbitration and Mediation?
    • Arbitration - binding, and non binding
    • Mediation - always non-binding
  26. Agency?
    Agency Law allows an individual to assign another person the power to act and to enter agreements. The two parties (the principle and the agent) enter into and agency agreement.

    Prinicple wishes to have specific task accomplished

    Agent acts on the principles behalf
  27. What is the Power of Attorney?
    A legal document that authorizes a person to act as another persons agent.
  28. What is the Uniform Commercial Code?
    A set of statutory laws that addresses the rights of buyers and sellers, transfers of ownership, the legal assumption of risk, and warranties. A warranty defines the terms that the seller will honor.
  29. What is an implied warranty and what does it include?
    • Is a warrenty that allows the buyer to assumer that:
    • 1) Seller has a clear title to the product (not stolen)
    • 2) Product will perform the function(s) for which it was produced and sold for
    • 3) It will perform as advertised
  30. What is an expressed warranty?
    Covers many more terms the seller will honor. For example, an auto manufacturer might offer a 5 -year, 50,000 mile warranty on a vehicle during which it will fix any defects on the car
  31. What is a tort?
    a tort is a civil wrong inflicted on other people or their property
  32. What is fraud?
    form of tort where someone "hurts" another by deception or manipulation
  33. What is product liability?
    establishment of a businesses legal responsibility to be diligent in the design, production, sale and consumption of products
  34. Criminal Law vs Civil Law
    • Criminal - dispute between government and individual
    • Civil - dispute between two individuals and a fine may be imposed
  35. What is the Apellate Court?
    -Dispute can be heard again if lower court errs
  36. What is a code of conduct violation
    acting in a way that is inconsistent with the organizations ethical standards
  37. Conflict of interest
    Choosing actions that promote your personal interest at the cost of others
  38. Falsification of records
    Altering records to present inaccurate information to managers, owners, and/or potential investors
  39. Whistleblower situations
    informing superiors or authorities of illegal or unethical organizational behavior
  40. What do stakeholders have interest in?
    The conduct of a business including employees, customers, vendors, the local community, or even society as a whole
  41. What did the Serbanes-Ocley Act of 2002 do?
    Protects Whistleblowers
  42. what is an ethics officer?
    basically a compliance officer. Responsible for assessing ethical implications of a companys activities, making recommendations regarding ethical policies and disseminating information to employees

    They report to the CEO and are interested to uncovering or preventing unethical and illegal actions
  43. What did the Federal Sentencing Guidelines for Organizations Act do?
    Set standards for all organizations - big and small, commercial and non-commercial. Firms must follow these regulations.
  44. 4 Steps of social responsibility! (pyramid)
    • 1) be profitable
    • 2) obey the law
    • 3) be ethical
    • 4) be a good corperate citizen
  45. Categories of Business
    • 1) Sole Proprietorship
    • 2) Partnership
    • 3) Corperation (known as a C Corperation)
    • 4) S Corporation
    • 5) Limited Liability Company
  46. Advantages and disadvantages of SOLE PROPRIETORSHIP
    • *Advantages
    • 1) Ease of formation
    • 2) Least Costly form of ownership to begin
    • 3) Total decision-making authority and control
    • 4) Minimal Legal restrictions
    • 5) Ease of Discontinuing

    • *Disadvantages
    • 1) Single owner status
    • 2) Unlimited Liability
    • 3) Owner is individually responsible for all losses of business
    • 4) Limited Skills and capabilities
    • 5) Limited Access to capital
    • 6) Challenges in transitioning the business to other owners
  47. Advantages and Disadvantages of a PARTNERSHIP.
    • *Advantages
    • 1) Aquisition of complementary skills and talents
    • 2) Flexibility of division of profits
    • 3) Larger pool of capital with the ability to attract more partners
    • 4) minimal government regulation

    • *Disadvantages
    • 1) Unlimited Liability
    • 2) Challenges in accumulating additional capital
    • 3) Difficulty in changing partners
    • 4) Potential Lack of continuity
    • 5) Bound by the law of agency
  48. What does the term Mutual Agency mean
    The partnership is held responsible for the decisions and behavior of each partner. Any partner can bind the partnership to contracts or legal obligations without the approval of the other partners.
  49. Limited Partners
    Risk only their investment
  50. What is the most complex business entity?
    A corporation!
  51. What are bylaws?
    Rules by which the corporation is run
  52. Preferred Stock versus common stock
    preffered stock conveys special ownership rights

    Common stock conveys no special priveleges but does convey voting rights to the corporation
  53. Corporate Governence
    • 1) Top - Stockholders
    • 2) Next - Board of Directors who ellect the....
    • 3) TOP Management... CEO/COO/CFO
    • 4) Middle Management (MGMT btw...)
    •             -division lead
    •             -Plant manager
    • 5) Supervisiory
  54. Corporate Regulations
    No single individual that is responsible ------ this makes the government very nervous....... very... very nervous.....
  55. Securities and Exchange Commission (SEC)
    • 1) Sale of stock/financing reporting
    • 2) Full Disclosure
    • 3) Due Diligence
  56. S CORPORATION!!!!!!!!
    • 1) Limited Liability
    • 2) Single Taxation
    • 3) Unlimited Life

    Restrictions: Number of shareholders
  57. LLC
    • Taxed like a partnership
    • ... not limited to number or type of owner(s)
  58. What is a merger?
    Two companies becoming one!
  59. What is an aquisition?
    One firm buying another
  60. Types of aquisition?
    • 1) Horizontal - two in same industry
    • 2) Vertical - Two in different industries
  61. Term for demand?
    Quantity of goods and services that consumers are willing to buy at different prices
  62. Term for supply?
    Quantity of goods and services that businesses are willing to provide at those different prices
  63. Market Capitilization
    mulitply the # of companies shares by the close (price per share)
  64. Net Present value
    more money today better that money you will have but don't have yet....
  65. What does government intervention prevent?
    • 1) Ensures fair competition
    • 2) Promotes Social responsibility and economic health
    • 3) corrects market failures and ethical lapses
  66. What are punitive damages?
    Fines for punishment...
  67. What is the purpose of bankruptcy?
    To give businesses a second chance when unable to meet contractual obligations
  68. Specialization
    measure of how broadly or narrowly defined the range of included activities are
  69. Economic cost
    amount of money spent implementing the decisions
  70. Oppurtunity Cost
    Is the cost of what you gave up, not the sum of alternatives but the benefit of the single alternative
  71. 4 P's of the Market Mix
    • 1) Product
    • 2) Price 
    • 3) Place
    • 4) Promotion and Service
  72. What is market strategy?
    To analyze its competitive advantages, plans and actions
  73. 4 P's of the marketing mix
    • 1) Products and services (narrow production line, specialized services)
    • 2) Price (allow customer to pay for it before or after the fact) Higher prices means lower volume
    • 3) Promotion (advertising, salesmanship)
    • 4) Place or Distribution Channel (Location or distributor)
    • 5) Service (customer service)
  74. Geographic Segmentation
    focusing on needs of the customer based on their geographic location
  75. Demographic Segmentation
    focusing on the attributes of the market based upon gender, age, income, education,etc.
  76. Physiographic Segmentation
    puting people into groups based on beliefs or ideas they have
  77. Current Assets Include
    • -cash
    • -accounts recievable
    • -inventory
  78. Fixed Assets include:
    • -Property. plant and equipment
    • -accumulated depreciation
    • -Total fixed assets
  79. What is the Contribution margin?
    differnece between the revenue brought in by the sales and the costs of making the products for sale
  80. What is the compliment?
    The number of workers
  81. What is the caliber of the workers
    The talent of the work force
  82. Steps in Supply Chain Management
    • 1) Plan
    • 2) Source
    • 3) Make
    • 4) Deliver
    • 5) Return

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