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Business Midterm #2
| Question | Answer |
|---|---|
| Production | the creation of finished goods and services |
| factors of production | land, labor, capital, entrepreneurship, knowledge |
| operations management | converting or transforming resources into goods and services. |
| service operations management | creation of intangible services / creating a good experience |
| functions of operations management | inventory, quality control, production scheduling, follow-up. products need to be on time, on budget, and to specifications |
| flexible manufacturing | designing machines to do multiple tasks to produce a variety of products |
| lean manufacturing | increasing quality and efficiency while decreasing the need for resources |
| Nanomanufacturing | being able to manipulate materials on a molecular or even atomic scale |
| facility location | selecting a location for operations |
| factors of facility location | labor costs, proximity, resources, crime rate |
| interfirm operations | outsourcing engineering, manufacturing, etc. to other companies |
| telecommuting | working from home |
| facility layout | the physical arrangement of resources (including people) in the production process |
| goal of facility layout | service - easy to find product. manufacturing - efficiency |
| Materials Requirement Planning (MRP) | a computer-based system ensuring that needed parts are at the right place / time by using sales forecasts |
| just-in-time inventory control | minimal inventory is kept on hand. requires excellent coordination with suppliers. |
| the Baldrige Awards | award given to businesses that show outstanding performance in obtaining quality |
| International Organization for Standardization (ISO) | A non-governmental global organization who develops technical standards for quality. |
| additive manufacturing | 3D printing |
| information technology allows for... | more flexibility in location |
| process manufacturing | the part of production that physically / chemically changes materials |
| key product processes | continuous (long, constant production) or intermittent (making products in batches) |
| CAM | computer-aided manufacturing - the use of computers in the manufacturing of products |
| CIM | computer-integrated manufacturing - a combination of CAM and CAD |
| Pros/cons of CIM | Cuts up to 80% of manufacturing time, but is very expensive |
| mass customization | mass production of customizes goods and services |
| Types of facility layout | assembly, modular, fixed-positions |
| Modular facility layout | teams of workers combine to produce more complex units of the final product |
| fixed-position layout | the product remains stationary and workers work around the product |
| purchasing | searching for high quality resources and the best suppliers, negotiating the best price for goods and services |
| Six Sigma quality | a quality measure that allows only 3.4 defects per million opportunities |
| lean companies | less human effort, less manufacturing space, less inventory, less defects |
| PERT | Program Evaluation and Review Technique - analyzing/sequencing tasks, estimating time for each task, |
| critical path | the sequence of tasks in a PERT network that takes the longest to complete. |
| Other paths in a PERT network can be delayed, as long as... | the critical path is on track |
| Gantt chart | A time and activity bar chart that is used for planning, managing, and controlling major programs that have a distinct beginning and end. |
| accounting | recording, summarizing and interpreting financial events and transactions to provide information to interested parties |
| managerial accounting | assisting internal managers with decision making (cost of production, budget control, etc.) |
| financial accounting | accounting information provided to external users |
| the accounting system | inputs, processing, outputs |
| Inputs (the accounting system) | accounting documents, sales documents, payroll records, shipping documents |
| processing (the accounting system) | putting entries into journals and ledgers |
| outputs (the accounting system) | financial statements (balance sheet, income statement, cash flow) |
| Assets = | Liabilities + Owner's Equity |
| Revenue - Expense = | Profit |
| assets | resources owned by a business |
| Liabilities | debts owed |
| owner's equity | what the owner actually owns |
| Accounting Cycle Step 1 | analyze source documents |
| Accounting Cycle Step 2 | record transactions in journals |
| Accounting Cycle Step 3 | Transfer journal entries to ledger |
| Accounting Cycle Step 4 | take a trial balance |
| Accounting Cycle Step 5 | Prepare financial statements |
| Accounting Cycle Step 6 | Analyze financial statements |
| financial statement | a summary of all the financial transactions that have occurred over a particular period of time |
| balance sheet | assets are balanced by liabilities and equity. |
| Income Statement | A financial statement showing the revenue and expenses for a fiscal period. |
| COGS | cost of goods sold |
| variable costs | costs that vary with the quantity of output produced |
| fixed costs | costs that remain constant as output changes |
| operating expenses | All of the expenses involved in running a business |
| the bottom line | net income after subtracting expenses |
| the bottom line is found on the... | income statement |
| on a balance sheet, assets are listed in order of... | liquidity |
| Statement of Cash Flows | reports cash receipts and disbursements related to operations, investments, and financing. |
| cash flow - operations | creating goods / transactions |
| cash flow - investment | acquiring assets, renting money for a higher return |
| cash flow - financing | where you get money; debt management and dividends |
| ratio analysis | an assessment of financial conditions using financial statements |
| finance | acquiring and managing funds |
| why firms fail | undercapitalization, poor control over cash flow, inadequate expense control |
| undercapitalization | not having sufficient funds to operate |
| financial manager responsibilities | paying bills, collecting overdue payments, and identifies opportunities |
| financial planning | analyzing short-term and long-term money flows to and from the firm |
| steps of financial planning | 1. Forecasting the firm's short-term and long-term financial needs |
| 2. Developing budgets to meet those needs | |
| 3. Establishing financial controls to see whether the company is achieving its goals | |
| short-term forecast | predicts revenues, costs, and expenses for a period of one year or less |
| budget | setting expectations for revenue, and allocating resources based on expectations |
| financial control | periodically comparing actual revenues/costs/expenses with budget |
| key areas for funds | day-by-day needs, controlling credit operations, acquiring needed inventory, capital expenditures |
| financial managers... | try to minimize cash spending to free money for investing, suggest companies pay bills as late as possible, and advise collecting what's owed ASAP |
| bank credit cards... | decrease the time/expense of collecting accounts receivable |
| accounts receivable | money that a business is owed |
| accounts payable | money that a business owes |
| capital expenditures | major investments (land, buildings, trademarks, copyrights, etc.) |
| debt financing | funds raised through various forms of borrowing that must be repaid |
| trade credit | the practice of buying goods and services now and paying for them later |
| secured loan | a loan backed by collateral, something valuable such as property |
| factoring | the process of selling accounts receivable for cash |
| commercial paper | short-term unsecured debt issued by large corporations. eliminates negotiating with a commercial bank |
| leverage | raising needed funds through borrowing to increase a firm's rate of return |
| rate of return | the percentage of increase in the value of your savings from earned interest |
| Dodd-Frank Wall Street Reform and Consumer Protection Act | preventing the excessive risk-taking that led to the 2008 crisis |
| cash flow cycle | production -> inventory -> sales -> cash |
| bonds | borrowing in the form of an IOU that pays interest. form of long-term debt |
| primary bonds | firm selling to investment bankers (underwriters) |
| secondary bonds | stockholders sell/trade already purchased bonds |
| equity financing | arranging funds by selling ownership shares in the company, publicly or privately |
| adding stock shares... | decreases the value of each share |
| stockholder's rights | own a piece of the company, benefit from stock increase and dividends, vote, share in risk |
| yield | dividend ÷ price |
| earnings per share = | net income ÷ number of shares |
| stock book value = | owner's equity ÷ number of shares |
| dividend | cash payment to stockholders |
| current ratio | current assets ÷ current liabilities |
| quick/acid ratio | (Current Assets - Inventory) ÷ Current Liabilities |
| debt to equity ratio | total debt ÷ total equity |
| time value of money | money in your possession right now is worth more than future money |
| global exchange of money changes based on... | the relation of the U.S. dollar compared to other countries |
| falling dollar value | The amount of goods and services you can buy with a dollar decreases. |
| rising dollar value | The amount of goods and services you can buy with a dollar increases. |
| impacts of the falling dollar | tourism, overseas demand, and profits in foreign markets increase |
| reserve requirement | A percentage of commercial banks' checking and savings accounts that must be physically kept in the bank. Set by the Federal Reserve Bank |
| open market operations | the purchase and sale of U.S. government bonds by the Fed |
| The Fed | The Federal Reserve Bank |
| standards for money | Portability, Divisibility, Stability, Durability, Uniqueness |
| Federal Reserve's dual mandate | promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates |
| discount rate | The interest rate on the loans that the Fed makes to banks |
| The Fed slows the economy by... | increasing the reserve, selling bonds, and increasing the discount rate |
| The Fed speeds up the economy by... | decreasing the reserve, buying bonds, and decreasing the discount rate |
| commercial banks | profit-seeking, receives deposits and uses them to make loans |
| demand deposit | checking account |
| savings and loan associates (S&Ls) | accept checking/savings deposits, and provide home mortgage loans |
| credit unions | nonprofit, member-owned cooperatives that offer full banking services |
| nonbanks | don't accept deposits, but offer many normal services |
| Community Reinvestment Act | Required banks to make loans available in low income, minority communities |
| Federal Deposit Insurance Corporation (FDIC) | the government agency that insures customer deposits if a bank fails |
| electronic funds transfer system (EFT) | electronic financial transactions |
| letter of credit | a promise by the bank to pay the seller once certain conditions are met |
Created by:
zkingsley
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