Business Acument

Question 1

Return on Investment (ROI)

Answer 1

how beneficial a new tool/practice has been compared to its initial investment/cost; usually a percentage; formula is net return on investment / cost of investment X 100%; important to include all associated costs in the initial investment/cost amount

Question 2

Return on Equity (ROE)

Answer 2

amount of money made compared to the average investment of each shareholder; usually the foundation of strategic plan

Question 3

Balance Sheet

Answer 3

reports a company’s assets, liabilities, and equity over a specific period of time; assets - liabilities = equity

Question 4

Asset (Financial Term)

Answer 4

any resource owned by company as a result of previ8ous actions and from which future gains are expected

Question 5

Liability (Financial Term)

Answer 5

current obligation as a result of previous actions expected to result in an outflow of resources

Question 6

Equity (Financial Term)

Answer 6

residual interest and assets after deducting all liabilities

Question 7

Bottom-up Budgeting

Answer 7

requires dept supervisors to forecast dept expenses and payroll costs for coming period; relies heavily on lower-level supervisors with help from HR and then final approval from top managers

Question 8

Top-down Budgeting

Answer 8

estimating expenses and payroll costs for an entire organization then allocating a set amount to each dept manager leaving them responsible for managing the funds

Question 9

Business Case

Answer 9

document produced to explore solutions to a business problem; common elements: problem statement, background, objectives, current status, resource requirements, alternatives to proposed solution, additional considerations like potential risks, action plan, executive summary