Larry Jarrell busn 110, 9-13 Flashcards
Financial capital–
Funds that a firm uses to acquire assets and finance its operations
Finance–
functional area of business that is concerned with finding the best sources
Risk–
degree of uncertainty regarding the outcome of a decision
Risk-return tradeoff–
observation that financial opportunities that offer high rates of return are riskier than those offering lower rates of return
Financial ratio analysis–
computing ratios that compare values of key accounts listed on financial statements
Liquidity ratios–
measure the ability of a firm to obtain the cash it needs to pay its short-term debt as they come due
Liquid asset–
can quickly be converted into cash with little risk of loss
Asset management ratios–
measure how effectively a firm uses its assets to generate revenue
Leverage ratio–
measure the extent to which a firm relies on debt financing in its capital structure
Profitability ratios–
measure the rate of return a firm earns on various measures of investment
Budgeted income statements–
shows how a firm’s budgeted sales and costs will affect expected net income
Budgeted balance sheet–
forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance the assets
Cash budget–
detailed forecast of future cash flows; helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash
Trade credit–
granted by sellers when they deliver goods and services to customers without requiring immediate payment, and it is a form of spontaneous financing
Factor–
company that provides short-term financing to firms by purchasing their accounts receivables at a discount
Line of credit–
arrangement between a firm and a bank
Revolving credit agreement–
bank makes a binding commitment to provide funds up to a specified credit limit at any time during the term of the agreement; guaranteed line of credit
Commercial paper–
short-term promissory notes issued by large corporations
Retained earnings–
part of a firm’s net income that is reinvested
Equity financing–
funds provided by the owners of a company
Debt financing–
funds provided by lenders (creditors)
Capital structure–
mix of equity and debt financing that a firm uses to meet its permanent financing needs
Dodd-Frank act–
law enacted in the aftermath of the financial crisis of 2008-2009 that strengthened government oversight of financial markets
Cash equivalents–
safe and highly liquid assets that many firms list with their cash holdings
U.S. treasury bills (T-bills)–
short-term marketable IOUs issued by the U.S. federal government
Money market mutual funds–
pool funds from many investors and use these funds to purchase very safe, highly liquid securities
Capital budgeting–
procedure a firm uses to evaluate long-term investment proposals
Time value of money–
principle that a dollar received in the future
Present value–
amount of money that, if invested today at a given rate of interest, would grow to become some future amount in a specified number of periods
Net present value (NPV)–
sum of the present values of expected future cash flows from an investment minus the cost of that investment
Financial markets–
transfer funds from savers to borrowers
Depository institution–
get funds by accepting checking and savings deposits and lending funds to borrowers
Credit union–
cooperatives that are owned by its depositors
Savings and loan association–
accept savings and checking account deposits to make mortgage loans
Securities broker–
act as agents for investors who want to buy and sell financial securities
Securities dealer–
participate directly in securities markets, and buy and sell stocks for their own accounts
Investment bank–
specialize in helping firms raise financial capital by issuing securities in primary markets
Federal Reserve Act of 1913–
established the federal reserve system (the Fed) as the central bank of the united states
Banking Act of 1933–
established federal deposit insurance corporation to insure bank deposits; prohibited commercial banks from selling insurance or performing the functions of investment banks
Securities Act of 1933–
required firms issuing new stocks in a public offering to file a registration statement with the Securities Exchange Commission (SEC)
Securities and Exchange Act of 1934–
established the Securities and Exchange Commission to regulate and oversee the securities industry
Financial Services Modernization Act of 1999–
overturned the section of the Banking Act of 1933 that prohibited commercial banks from selling insurance or performing the functions of investment banks
Common stock–
basic form of ownership in a corporation
Capital gain–
return on investment received if the price of the stock rises above the amount paid for it
Preferred stock–
gives its holder preference over common stockholders in terms of dividends and claims on assets
Bond–
formal debt instrument issued by a corporation or government entity
Maturity date–
date when a bond will come due
Par value (of a bond)–
value of a bond that the issuer promises to pay the bondholder when the bond matures
Coupon rate–
interest paid on a bond
Current yield–
amount of interest earned is expressed as a percentage of the bond’s current market price
Exchange traded fund (ETF)–
shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or securities
Primary securities market–
market in which newly issued securities are traded
Secondary securities market–
trades previously issued securities
Public offering–
new securities are offered to any investors who are willing and able to purchase them
Private placement–
negotiated between the issuing corporation and a small group of accredited investors
Convertible security–
bonds or shares of preferred stock that investors can exchange for a stated number of shares of common stock
Mutual fund–
institutional investor that raises funds by selling shares to investors and uses the accumulated funds to buy a portfolio of many different securities
Stock (or securities) exchange–
organized venue for trading stocks and securities that meet listing requirements
Over-the-counter (OTC) market–
securities that are not listed on exchanges are traded
Electronic communications network (ECN)–
automated, computerized securities trading system that automatically matches buyers and sellers
Market order–
tell brokers to buy or sell a specific security at the best currently available price
Limit order–
tell brokers to buy a specific stock only if its price is below a certain level, or to sell a specific stock only if its price is above a certain level
Stock index–
tracks how the prices of specific sets of stocks have changes
Dow Jones Industrial Average (DJIA)–
tracks stock prices of 30 large, well-known U.S. corporations
Standard & Poor’s 500–
based on prices of 500 major U.S. corporations in a variety of industries and market sectors
Marketing–
organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways the benefit the organization and its stakeholders
Utility–
ability of goods and services to satisfy wants
Customer relationship management (CRM)–
ongoing process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value
Customer satisfaction–
customers’ perception that a good or service delivers value above and beyond their expectations
Customer loyalty–
customers repeatedly buy certain products
Marketing plan–
formal document that defines marketing objectives and the specific strategies for achieving those objectives
Market segmentation–
dividing potential customers into groups of similar people, or segments
Target market–
group of people who are most likely to buy a particular product
Consumer marketers (business-to-consumer or B2C)–
direct their efforts toward people who are buying products for personal consumption
Business marketers (business-to-business or B2B)–
direct their efforts toward people who are buying products to use either directly or indirectly to produce other products
Demographic segmentation–
dividing the market based on characteristics about people such as age, income, ethnicity, and gender
Geographic segmentation–
dividing the market based on where consumers live
Psychographic segmentation–
dividing the market based on consumer attitudes, interests, values, and lifestyles
Behavioral segmentation–
dividing the market based on how people behave towards various products
Marketing mix–
blend of marketing strategies for products, prices, distribution, and promotion
Consumer behavior–
people’s actions when they are buying, using, and discarding goods and services for their personal consumption
Cognitive dissonance–
consumer discomfort with a purchase decision typically for a higher-priced item
Business buyer behavior–
describes people’s behavior when they are buying products to use directly or indirectly to produce other products
Marketing research–
process of gathering, interpreting, and applying information to uncover opportunities and challenges, and to make better decisions
Secondary data–
existing data that marketers gather or purchase for a research project
Primary data–
new data that marketers compile for a specific research project
Observation research–
does not require the researcher to interact with the research subject
Survey research–
requires that the researcher interact with the research subject
Product–
anything that an organization offers to satisfy consumer needs and wants
Consumer products–
purchased for personal use or consumption
Business products–
purchased to use either directly or indirectly in the production of other products
Product differentiation–
attributes that make a good or service different from other products that compete to meet the same or similar customer needs
Quality level–
measure of how well a product performs its core functions
Product consistency–
measure of how reliable a product is in delivering its promised level of quality
Product features–
specific characteristics of a product
Customer benefit–
advantages that a customer gains from a specific product feature
Product line–
groups of products that are closely related to each other
Product mix–
total number of product lines and individual items sold by a single firm
Cannibalization–
when a firm’s new product takes sales away from its existing products
Brand–
a product’s identity that sets it apart from other players in the same category
Brand equity–
overall value of a brand to an organization
Line extensions–
similar products offered under the same brand name
Brand extension–
new product, in a new category, introduced under an existing brand name
Licensing–
purchasing the right to use another company’s brand name or symbol
Co Branding–
established brands from different companies joining forces to market the same product
National brands–
brands that the producer owns and markets
Store brands–
brands that the retailer both produces and distributes
Promotion–
influences consumer purchase decisions through information, persuasion, and reminders
Integrated marketing communication–
coordination of marketing messages through every promotional vehicle
Positioning statement–
articulates how the marketer would like the target market to envision a product relative to competition
Promotional channels–
specific marketing communication vehicles
Advertising–
designed to influence a target audience with regard to a product, service, organization, or idea
Sales promotion–
designed to stimulate sales activity through specific short-term programs
Consumer promotion–
generates immediate consumer sales
Trade promotion–
stimulates wholesalers and retailers to push specific products aggressively
Public relations (PR)–
ongoing effort to create positive relationships with all of a firm’s different publics
Publicity–
unpaid stories in the media that influence perceptions about a company or its product
Personal selling–
person-to-person presentation of products to potential buyers
Distribution strategy–
plan for delivering the right product to the right person at the right place at the right time
Channel of distribution–
network of organizations and processes that links producers to consumers
Physical distribution–
actual, physical, movement of products along the distribution pathways
Direct channel–
distribution process that links a producer and a customer with no intermediaries
Channel intermediaries–
distribution organizations that facilitate the movement of products from a producer to a consumer
Retailers–
distributors who sell products directly to users in small quantities
Wholesalers–
distributors that buy products from producers and sell them to other businesses
Merchant wholesalers–
take legal possession of the goods they distribute
Agents/brokers–
do not take title of the goods they distribute
Multichannel retailing–
provides multiple distribution channels for consumers to buy a product
Multi Level marketing (MLM)–
involves hiring independent contractors to sell products to their personal network
Supply chain–
all organizations, processes, and activities involved in the flow of goods from raw materials to the final consumer
Supply chain management (SCM)–
planning and coordinating the movement of products along the supply chain
Logistics–
subset of SCM that focuses on the tactics involved in moving products along the supply chain
Penetration pricing–
aims to capture the market through rock-bottom prices
Everyday-low pricing (EDLP)–
designed to achieve profitability through high sales volume; long-term discount pricing
High/low pricing–
designed to drive traffic to retail stores by special sales on a limited number of products, and higher everyday prices on others
Loss-leader pricing–
pricing a handful of items temporarily below cost to drive traffic
Skimming pricing–
aims to maximize profitability by offering new products at a premium price
Break even analysis–
process of determining the number of units a firm must sell to cover all costs
Profit margin–
gap between the cost and the price of an item on a per-product basis
Odd pricing–
practice of ending prices in numbers below even dollars and cents in order to create a perception of greater value
Financial leverage–
the use of debt in a firm’s capital structure
Spontaneous financing–
financing that arises during the natural course of business without the need for special arrangements
Covenant–
a restriction lenders impose on borrowers as a condition of providing long-term debt financing
Certificate of deposit (CD)–
an interest-earning deposit that requires the funds to remain deposited for a fixed term. Withdrawal of the funds before the term expires results in a financial penalty
Securities and Exchange Commission–
the federal agency with primary responsibility for regulating the securities industry
Net asset value per share–
the value of a mutual fund’s securities and cash holdings minus any liabilities, divided by the number of shares of the fund outstanding
Financial diversification–
a strategy of investing in a wide variety of securities in order to reduce risk
Initial public offering (IPO)–
the first time a company issues stock that may be bought by the general public
Underwriting–
an arrangement under which an investment banker agrees to purchase all shares of a public offering at an agreed-upon price
Registration statement–
a long, complex document that firms must fi;e with the SEC when they sell securities through a public offering
Accredited investor–
an organization or individual investor who meets certain criteria established by the SEC and so qualifies to invest in unregistered securities
Market makers–
securities dealers that make a commitment to continuously offer to buy and sell the stock of a specific corporation listed on the NASDAQ exchange or traded in the OTC market
Marketing concept–
a business philosophy that makes customer satisfaction - now and in the future - the central focus of the entire organization
Value–
a customer perception that a product has a better relationship than its competitors between the cost and the benefits
Environmental scanning–
the process of continually collecting information from the external marketing environment
Market share–
the percentage of a market controlled by a given marketer
Green marketing–
developing and promoting environmentally sound products and practices to gain a competitive edge
Mass customization–
the creation of products tailored for individual consumers on a mass basis
Pure goods–
products that do not include any services
Pure services–
products that do not include any goods
Product life cycle–
a pattern of sales and profits that typically changes over time
Product placement–
the paid integration of branded products into movies, television, and other media
Advergaming–
video games created as a marketing tool, usually with brand awareness as the core goal
Buzz marketing–
the active stimulation of word of mouth via unconventional, and often relatively low-cost, tactics. Also known as guerrilla marketing and viral marketing
Sponsorship–
a deep association between a marketer and a partner which involves promotion of the sponsor in exchange for either payment or the provision of goods
Push strategy–
a marketing approach that involves motivating distributors to heavily promote a product to the final customers, usually through heavy trade promotion and personal selling
Pull strategy–
a marketing approach that involves creating demand from the ultimate consumers so that they “pull” your products through the distribution channels by actively seeking them
Independent wholesaling businesses–
independent distributors that buy products from a range of different businesses and sell those products to a range of different customers
Wheel of retailing–
a classic distribution theory that suggests that retail firms and retail categories become more upscale as they go through their life cycles
Modes of transportation–
the various transportation options (planes, trains, and railroads) move products through the supply chain
