Dr. Herskowitz's Final exam study guide
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| Current Assets | Assets that will be converted to cash within 1 year
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| Working Capital | Current Assets-Current liablilites
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| Break-Even point | the point where revenues generate $0 income or losses
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| Profit Margin | Net Profit (EAT)/ Revenues
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| Current Ratio | Current Assets/ Current Liabilites
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| What is the difference between a company's profits and its cash flow? Give at least 3 examples of the difference between cash flow and profits | depreciation; Capital expenditures not included in income statement; repayment or increase in debt; credit sales reduce cash flow; increase or decrease in inventory not on income statement; purchase or sale of assets not on income statement
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| COGS | Cost Of Goods Sold
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| What will happen to ABC's working capital if it uses $100,000 of its cash and purchases a new truck? | current assets decrease by $100,000 with no change in Current Liab. therefore Working Capital will decrease by $100,000
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| Return on Assets formula | Net Income/ Total Assets
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| How can you increase your working capital? | Decrease inventory--Increase inventory turns--reduce receivables by reducing credit policy--speed up collections--increase cash by reducing expenses
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| what is a S501 (c) (3) corporation? | a tax exempt corporation
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| What is a Utilitarian ethical philosophy? | The greatest good for the greatest number
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| what is a "unique selling proposition?" (USP) | a key customer benefit that answers the customer's question "what's in it for me"
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| What is an IPO? | Initial Public Offering
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| What is "Leverage"? | the amount of debt that a company has in comparison to its equity
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| what is an SBA loan? | A loan from the Small Business Administration. The SBA is a government insured loan program.
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| What does the term "Collateral" mean? | it is the assets used to secure a loan
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| how does price convey an image for the product or service? | offers signals quality and value to customers. it indicates what niche the product is in.
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| offers comparison to competitors products | small businesses often under price their product in an attempt to compete with other products. Target market, business images and prices are all interrelated
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| distinguish between 'objectivist' and 'relativists' in determining ethical philosophies | objectivist: moral standards are objective, set and consistent regardless of time, culture or place. Relativists: believe that moral and ethics are different given different cultures or times. one person cannot impose an ethical standard on someone
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| comparing media for ads, differentiate between 'audience' 'reach' and 'frequency | audience: # of paid subscribers or listening of something specific...Reach: #of people exposed to an ad at least once in a period of time...Frequency: avg. # of times a person is exposed to an ad in the same time period.
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| what is publicity (vs. ads) | any news covered by the media and the business doesnt have to pay. ex. write an article--sponser an even-involve celebrities-speak to local organizations-publish a newsletter-sponsor a seminar-serve on community boards-promote a cause
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| when introducing a new product: discuss penetration and skimming as pricing strategies. | Penetration: competitive market, low price/high volume...Skimming: little or now competition, initial high price 'whatever the market will bear', lower price as competition enters
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| types of loans that banks will typically make to small bus.'s | short-term loans, commercial loans and working capital loans. floor planning loans. intermediate and long term loans. term loans. eqp loans. character loans.
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| discuss the 2 most typical type loans for an asset based lender | account receivable financing-55% to 80% of face amt.Acct rec. assigned to lenger. Payments made directly to lender. Inventory financing:no more than 50% of value of inventory.Lender takes a security interest in inventory. High cost and high adm. maint.
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| what is a line of credit (LOC) and how does it typically work? | a short term loan from a bank that allows a borrower to repay the loan and then re-borrow from the loan throughout the term of the LOC.
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| what is a UBIT | Unrelated Business Income Tax. (business activity producing income)
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| list 4 equity financing-advantages and disadvantages | 1-friends and family members 2-Angels:private investors who put on LOTS of cash up front for part ownership) 3-venture capitalists:tricky.. rigorous review of details 4-IPO: selling stock to the public.
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| what is a SWOT analysis? | S-strength W-weakness O-opportunities T-threats. SW are internal and OT are external
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| what 5 things should you learn from a UFOC? | 1-specific requirements 2-contract agreements 3-previous owners and contracts 4-royalties 5-fees
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| name and ex. of the 3 types of franchises | merchandise: Sonic Service: house cleaners Both: Salon (has both service-haircuts, and merch.-retail products)
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| what is the primary mission of World Vision International? | feed and clothe the hungry
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| What does World Vision mean when they talk about 'participatory development'? | having recipiants of hte money help with the projects, like getting a job.
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| describe a micro-finance organization. | a bank holds classes for poor women and grows to teach them finances. then gives them a loan with small payments.
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| what are loan repayment rates and why so high for a micro-finance loan? | repayment rates are high-around 130% but they have a 90-100% payback rate!! they're so high bc the people working the bank have to earn a living too!
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