BUSINESS (Vet Med as a Business) Flashcards
importance of vet business
-students coming out with more loans
-life skills (lending, borrowing, and investing)
-need for more education
business
-an organization engaged in commercial, industry or professional activities
-practice of making ones’ living
-making money by producing or buying and selling products
purpose of business
-organize some sort of economic production of goods or services
commerce
-exchange of goods and services between businesses or entities
going concern
-company that has resources need to continue operating for at least 12months
-need to have finanical statements each year
goodwill (“blue sky”)
-intangible assests that arise
Ex. company’s brand name, customer relations, customer base, etc.
-can be calculated as the difference between the cost of purchase and the fair market value of all tangible assets
base goodwill on mulitples
Ex. a really good company might have a multiple of 8 and a rural practice not doing the best might have a multiple of 2
agent
-person or party that acts on behalf of another person or party
creditor
-typically a finanical instituion (bank) that lends money or extends credit to another party
debtor
-person on other side of transaction who now owes the creditor money
revenue
-total amount of money that a business recieves for selling its goods and service
income (‘bottom line’)
-net profit
-what is left after paying all expenses and taxes
assest
-a resource (tangible or intangible) owned or controlled by an entity and has future economic value
Ex. can generate income
liability
-obligation to pay for a past transaction
Ex. loan from the bank
liquidation
-process in law when a company that is closing sells all its assests and distributes each proceeds to claimants (creditors and shareholders)
assests sold (liquidation)
-first distributed to ‘secured creditors’ (bank)
-what is left over goes to unsecured creditors
secured creditors
-usually the bank
-provided a secured mortgage or loan
-can obtain interest in the property or place a lien on it (allows them to sell the property to pay the debt they are owed)
bankruptcy
-permits an honest but unfortunate person to obtain relief from their debts while treating the creditors fairly and equally
-when liabilities are greater than assests
-goal is to provide a fresh start
-“restructuring”
debts not discharged by bankruptcy
-student loans (less than 7 years after going to school)
-alimony (money during seperation or divorce) or child support
-debt arising from fraud
Adam Smith quote
-people see an opportunity to make money
-they don’t do what they do for the fun of it, they do it to make money
scarcity
-people have unlimited wants and needs but we live in a world with LIMITED resources
-must make decisions with respect to how we allocate our resources to satisfy our needs and wants
opportunity cost
-value of the most valuable choice not taken, or the cost of the foregone alternative (ex. new tractor, if don’t then you can’t do as much field work)
-consider that every resource can be put to an alternative
*cost is the value of the next highest valued alternative
*everything we do in life has an opportunity cost
“no such thing as a free lunch”
-simplest explanation of opportunity cost
-every decision we make has a cost (you are paying for it somehow)
law of supply and demand
-availability of a resource and the demand/desire for a particular good/service at a particular price (equilibrium price)
law of demand
-all things being equal, the higher the price of a good or service, the less people will demand
Ex. increase tuition, less people will apply
-increase in price and decrease in demand relates to opportunity cost
law of supply
-as the price of a good/service increases, the quantity of the good/service being supplied will increase
ex. if cattle prices nicrease, more people will retain heifers to increase the size of their herd
two competing forces
-scarcity of resources leads to increased prices, which stimulates the providers of the resources to produce more because the price is high
-as they produce more, the market becomes saturated and prices begin to fall
equilibrium
-price where demand supply intersect
demand curve
-level of demand at every price
-price and demand are inversely related
-lower the price, the higher the demand
supply curve
-product/service that producers are willing to produce, offer and sell at each price
-higher the price, the more willingness to supply the market
invisible hand of economy
-supply and demand curve
-“shortage” is like a bathtub you are trying to fill with water without putting the plug in it
SWOT analysis
-technique for making decisions
-good starting point for how to move forward
1. Strengths
2. Weaknesses
3. Opportunities
4. Threats
strengths
-things you do well
-qualitites that seperate you from others
-internal resources
weaknesses
-things you lack
-things competitors do better than you
-resource limitations
opportunities
-undeserved markets for specifics products
-few competitors in your area
-emerging need for your products
-media coverage of your compnay
threats
-emerging competitors
-changing regulatory environment
-negative media coverage
-changing customer attitudes toward your company
