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1 Becker BEC > B6 > Flashcards

B6 Flashcards

1
Q

5 Categories of Business Process Management

A
  1. Design
  2. Modeling (what-if?)
  3. Execution (need indicators of success)
  4. Monitoring
  5. Optimization
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2
Q

Purpose of BPM

A

*coordinate the functions of an organization to increase customer satisfaction

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3
Q

Business Process Management Techniques & Approaches

A

Plan - design
Do - implement
Check - monitor
Act - continuously improve

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4
Q

Indicators of Success

A
  1. Gross Revenue
  2. Customer Contacts
  3. Customer Satisfaction
  4. Operational Statistics
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5
Q

Benefits of BPM

A

Efficiency
Effectiveness
Agility

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6
Q

Implications for Shared Services

A
  1. service flow disruption

2. failure demand

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7
Q

BPM vs. Reengineering

A 
BPM = incremental change
Reengineering = radical change
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8
Q

JIT

A
  • pull approach
  • reduction in # of suppliers
  • benefits > cost
  • inventory does not add value
  • empowered employees with more skills
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9
Q

Quality =

A

product’s ability to meet or exceed customer expectations

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10
Q

Conformance Costs

A

Prevention (PREVENT)
*redesign, training
Appraisal (DETECT)
*testing, inspection

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11
Q

Nonconformance Costs

A

Internal (BEFORE)
*rework, scrap, tooling changes
External (AFTER)
*liability, lost customers, warranty costs, returned

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12
Q

Total Quality Principles

A

*please customers: quality and continuous improvement

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13
Q

GAP Analysis

A

*comparing to industry standards

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14
Q

Lean Manufacturing

A
  • cut the fat
  • does NOT focus on quality
  • waste reduction
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15
Q

Kaizen

A
  • continuous improvement

* resource usage stays within target costs

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16
Q

Theory of Constraints

A
  • focus on the bottleneck

* works around or leverages the constraint

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17
Q

Six Sigma

A
  • emphasis on cost reduction and quality

* rigorous metrics are used

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18
Q

5 Major Processes of Project Management

A
  1. Authorization
  2. Planning
  3. Implementation
  4. Monitoring
  5. Closing

*all are the role of the project manager

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19
Q

Authorization

A
  • charter = permission

* statement of work = describes deliverables

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20
Q

Planning

A

= establish baseline for quality

*ACQUIRING NEEDED EQUIPMENT AND SUPPLIES GOES HERE

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21
Q

Implementation

A
  • assure quality

* completing the work

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22
Q

Monitoring

A

*observe project execution and identify any problems

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23
Q

Closing

A

*ensure objectives have been completed

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24
Q

Project Manager

A
  • responsible for day-to-day oversight
  • CEO of the project
  • communicates to the project sponsor
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25
Q

Project Members

A

*perform the project tasks

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26
Q

Project Sponsor

A
  • executive level of management responsible for allocating funds
  • RESPONSIBLE FOR OVERALL PROJECT DELIVERY
  • communicates to the steering committee
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27
Q

Executive Steering Committee

A
  • group of executive level people

* similar to a board of directors

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28
Q

Planning for Risk Management

A

Risk Assessment and Risk Control (tradeoff between risk and return for projects)

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29
Q

Human Resource Plan

A

*documents workers and hours needed for a project

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30
Q

Responsibility Assignment Matrix

A

*shows all activities associated with one person and all people associated with one activity

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31
Q

Project Scope

A
  • must define deliverables

* defines work that will take place

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32
Q

Scope Baseline

A

*describes final product and scope of project

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33
Q

Requirements Documentation

Requirements Management Plan

A

*project requirements vs. how it will be evaluated and documented and analyzed

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34
Q

Cost Baseline

A
  • the amount of money to be spend

* follows an S curve distribution

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35
Q

Ways to Estimate Costs

A
  1. parametric estimating (statistical relationship)
  2. analogous estimating (similar sized projects)
  3. work breakdown structure (bottom-up analysis)
  4. three point estimate (high, low, probable)
  5. reserve analysis
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36
Q

SMART Goals

A 
S pecific
M easurablee
A ttinable
R ealistic
T ime bound
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37
Q

How is globalization measured?

A

*world trade as a % of GDP

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38
Q

The comparative advantage in global markets?

A

*specialization

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39
Q

What causes markets to be imperfect?

A
  1. regulations

2. physical immobility of resources

40
Q

What is Global Sourcing?

A

*using an combination of globalization methods

41
Q

Content or Value Added Limits

A

e. g. NAFTA

* disclose percentages of materials and labor in various products

42
Q

3 Types of Economic Systems

A
  • central planning
  • market economies
  • conglomerates
43
Q

Multipolarity and Interdependence Types

A
  1. Functional Interdependence (worldwide organizations and tasks)
  2. Systemic Interdependence (global issues that affect all nations)
  3. Multipolarity (vs. unipolar)
44
Q

Diversification Risk Types

A

Systematic: market risk
Unsystematic: diversifiable

45
Q

Types of Financial Risk

A
  1. interest rate risk
  2. market risk
  3. credit risk
  4. default risk
46
Q

When does the APR equal the effective rate?

A

*when pay is annual

47
Q

Effective Annual Interest Rate Formula

A

= (1 + (i/p))^p -1

i = stated interest rate
p = compounding periods per year
48
Q

Compound Interest Formula

A

= P0 x (1 + i)^n

49
Q

Nominal Rate of Return =

A

risk free rate + inflation rate

50
Q

Types of Risk Premiums

A
  • maturity risk
  • purchasing power/inflation
  • liquidity risk (short-term sale of asset)
  • default risk
51
Q

Risk Exposure Categories

A
  1. Transaction Exposure (g/l on specific transaction; NET THEM)
  2. Economic Exposure (increase/decrease of cash flows)
  3. Translation Exposure (MUST BE CONSOLIDATED SUBSIDIARY; balance sheet items change)
52
Q

Identifying Net Transaction Exposure

A
  • net the total impact

* effective and selective hedging

53
Q

Futures Hedges

A

*usually used for smaller transactions

54
Q

Risks with Net Transaction Exposure

A
  • A/R: P goes down; sell

* A/P: P goes up; buy

55
Q

Forward Hedge

A
  • private and larger transactions

* uses a contract

56
Q

Money Market Hedge

A

*international money market to plan to meet future currency requirements

57
Q

Currency Option Hedges

A
  • if FC increases, buy a call option

* if FC decreases, buy a put option

58
Q

Other Techniques for Transaction Exposure Mitigation

A
  1. LT forward contracts
  2. Currency Swaps
  3. Parallel Loan (you buy back your own currency eventually)
59
Q

Alternative Hedging Techniques

A
  1. Leading and Lagging - favorable exchange rates using subsidiaries
  2. Cross-Hedging - hedging a hedge
  3. Currency DIVERSIFICATION
60
Q

Managing Economic Risk and Translation Exposure

A

*depends on which line item (revenue or expense) are denominated in which currency

  • want sales when FC increases
  • want costs when FC decreases
61
Q

Transfer Pricing

A
  • minimize tax liability in certain jurisdiction

* reduce revenues and increase expenses

62
Q

Strong vs. Weak Cash Position

A

Strong: pay other subsidiaries in advance
Weak: pay richer subsidiaries after obligations were incurred as a means of preserving cash

63
Q

Short-term vs. Long-term Financing

A 
Short-term = lower cost, higher profits, higher risk
Long-term = higher cost, lower profits, lower risk
64
Q

Short-Term Financing Factors

A
  • rates are lower
  • higher liquidity
  • increased conversion in operating cycle, therefore higher profits
  • interest rate risk
  • credit risk
65
Q

Long-Term Financing Factors

A
  • higher rates
  • decreased interest rate risk
  • decreased credit risk
  • lower profitability
  • decreased liquidity
66
Q

Working Capital Financing

A

*spontaneous financing of current assets with trade accounts payable and accrued liabilities

67
Q

Letter of Credit

A

*third-party guarantee (usually required by a vendor

68
Q

Line of Credit

A

*renewable; represents a loan, not a guarantee

69
Q

Leasing Options

A
  • operating lease

* capital lease

70
Q

What is the effect of issuing new debt?

A

*it decreases the company’s credit worthiness

71
Q

Debentures vs. Bonds

A 
Debentures = unsecured
Bonds = secured
72
Q

Income Bonds

A

*pay interest only upon achievement of some income level

73
Q

Junk Bond

A

*unsecured, high risk, high return

74
Q

Debentures and Bonds vs. Equity Financing

A

Debentures and Bonds: decrease credit worthiness, increase EPS
Equity: increase credit worthiness, decrease EPS

75
Q

Degrees of ownership interest ________ as rights to income decrease

A

*increase

76
Q

Preferred Stock is also known as a

A

hybrid security

77
Q

Debt Covenants

A
  • protect value of debt by protecting credit rating of debtor
  • debtor agree to secure a lower cost of borrowing for a new loan
78
Q

Violation of Debt Covenants

A
  • technical default

* negotiate

79
Q

Financial Valuation of Perpetuities s

A

P = D/R

D = dividend
R = required return
80
Q

Dividend Discount Model

A

P(t) = (D(t+1)) / (R -G)

R = required rate
G = growth
D(t+1) = dividend in next period
81
Q

Price-Earnings Ratio for Forecasts

A

P0 = E1 x (P0/E1)

E = future EPS
P0 = price today

*sometimes the P/E ratio will just be given

82
Q

PEG Ratio

A

PEG = (P/E/G)

G = % x 100

P = PEG x E x G

83
Q

Price-to-Sales Ratio

A

*used for start-ups

P/S(1)

P = price today 
S(1) = sales in one year
84
Q

Price-to-Cash-Flow Ratio

A

= P/CF(1)

85
Q

Behavioral Biases

A

Excessive Optimism
Confirmation Bias
Overconfidence
Illusion of Control

86
Q

Impact of Loss Aversion

A
  1. Losses are more distracting than gains (riskier behavior to regain losses)
  2. managers are generally averse to sure losses (escalation of commitment)
87
Q

Code of Ethics for Internal Auditing

A

Integrity
Objectivity
Confidentiality
Competency

88
Q

Three General Standards for Internal Auditing

A
  1. Attribute standards
  2. Performance standards
  3. Implementation standards
89
Q

How often should the chief internal auditor report the organizational independence of the audit team?

A

*annually

90
Q

How often should external assessments of internal auditors be performed?

A

*at least once every five years

91
Q

Internal Audit Performance Standards

A
  • managing the internal audit activity
  • nature of work
  • engagement planning
  • performing the engagement
  • communicating results
  • monitoring progress
  • management’s acceptance of risk
92
Q

Internal Audit Engagement Planning & Objectives

A
  • objectives must be established for each engagement

* must reflect a preliminary risk assessment

93
Q

Internal Audit - Performing the Engagement

A
  1. identifying information
  2. analysis
  3. evaluation
  4. documenting
94
Q

Management’s Acceptance of Risk - Internal Auditor Responsibilities

A
  • report to management

* report to board only if management’s response is inadequate

95
Q

Parties Involved in Assurance vs. Consulting Services

A

Assurance: auditee, internal auditor, user (sponsor)
Consulting: internal auditor, user (sponsor)

96
Q

Internal Auditing can be described as a

A

*disciplined and systematic approach

1 Becker BEC (7 decks)

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