Ch 1 Flashcards
Statement on ethical professional practice
includes the following:
know your stuff
shut up about stuff
be ethical about stuff
present stuff fairly
time based competition
new technologies have affected speed of business transactions
JIT management
Lean Production
Just in Time
(saves you a lot of money)
competence
maintain high level of expertise by developing knowledge
- perform duties w/law, regulations and standards
- decision support/ recommendation: accurate, clear, concise and timely
- recognize & communicate limitations/ constrains
confidentiality
keep info confidential except when authorized/legal
- inform all parties, appropriate use. monitor subordinates
- refrain from using confidential info for unethical/illegal use
integrity
- mitigate conflict of interest. communicate to avoid conflict. Advise parties of any potential conflicts
- refrain from engaging
- Abstain from engaging/ supporting any activity that might discredit the profession
credibility
communicate info fairly and objectively
- disclose all relevant info that could reasonably be expected to influence an intended user’s understanding of the reposts, analyses or recommendations
- disclose delays or deficiencies in info, timeliness, processing or internal controls in conformance with organization policy and or applicable law.
JIT management
receiving materials just in time to put out, which causes you to be able to eliminate storage cost
// just in time when you receive materials just in time to process an order, eliminate storage costs, throughput time, etc. Strive for zero defects in manufacturing process.
lean production
manufacturing without wasting anything
// manufacturing without waste, which lowers a company’s costs and makes them more competitive.
includes eliminating carrying large inventories, reducing throughput time, and maintaining high quality standards while being cost efficient
- ability to sell inventory and collect receivables
INVENTORY TURNOVER: quickly sells inventory?
// measures how quickly a company sells its inventory
A/R TURNOVER : ability to collect cash
// measures the ability to collect cash from credit customer. Need to be able to collect cash from the sale!
DAYS’ SALES IN RECEIVABLE: days takes a sale in A/R?
// measures how many days a sale stays in accounts receivable before its collected!
- ability to pay long term debt
DEBT RATIO: assets financed // measures the amount of assets financed with debt
TIMES INTEREST EARNED ratio: how effective incomes can cover interest // measures how effectively incomes earned can cover interest expense incurred on long term debt.
- analyzing stock investments
helps evaluate stock investments
PRICE EARNINGS ratio: market price vs. company's earnings // ratio of market price of a common share vs. the company's earnings per share
DIVIDEND YIELD: dividend vs. market price // dividends per share vs. the market price per share
liquidity ratios
ability to pay debts when due
working capital
current ratio
quick ratio
working capital
+
current assets - current liabilities
assets: cash, a/r, inventory, supplies (within 1yr)
liabilities: a/r, utilities payable, unearned revenue (within 1 yr)
current ratio
>1
current assets / current liabilities
quick ratio
>1
(cash + short term investments + net receivables) / current liabilities
no inventory
profitability
commonly quoted financial ratios that measure profitability of a company
return of sales
return of total assets
return of equity
earnings per share
return on sales %
net income / net sales
shows the percentage of each sales dollar earned as net income.
return on total assets %
net income + interest expense / avg. Total assets
how well a company uses its assets to generate income
return on equity %
(net income - preferred dividends declared) / average common stockholder’s equity
common ration used to calculate in relation to $$ invested by common stockholders
earnings per share $
(net income -preferred dividends declared) / average # of common shares outstanding
probably most widely used ratio and most quoted. Must appear on the face of the financial statements. Amount of net income earned for each share fo outstanding common stock!
The Sarbanes-Oxley Act has significantly impacted the responsibility for financial reporting by publicly traded corporations.
true
Businesses are now viewing sustainability and social responsibility as opportunities for innovation and business development.
true
Which of the following is a software system that integrates all of a company’s departments?
ERP
When management uses feedback to take corrective action on the budgets, which of the following management responsibilities are being fulfilled?
controlling
Controlling means overseeing the company’s day-to-day operations.
false
Presenting information fairly and objectively is an example of which ethical standard?
credibility
