Must Know Flashcards
Added Value
When businesses transform raw materials and semi-finished products into finished products they add value.
Distribution channels
Function: provides a link between production and consumption.
Simple/complex depending on layers.
Sensitivity analysis
Sensitivity analysis is a technique which allows the analysis of changes in assumptions used in forecasts.
Debt factoring
A powerful tool that businesses can use to improve cash flow.
Lead time on a stock control chart
Amount of time between placing the order and receiving the stock.
Net cash flow
Net cash flow refers to the difference between a company’s cash inflows and outflows in a given period.
Total contribution
Total Contribution is the difference between Total Sales and Total Variable Costs.
Formulae: Contribution = total sales less total variable costs.
Contribution per unit
Contribution per unit = selling price per unit less variable costs per unit.
Margin of safety
Margin of safety is how much output or sales level can fall before a business reaches its break-even point.
(Current sales level - breakeven point) / Current sales level.
Dividend
A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves).
Contingency planning
The aim of contingency planning is to minimise the impact of a significant foreseeable event and to plan for how the business will resume normal operations after the event.
Strategic drift
When strategy is no longer relevant to external environment.
Lean production
Lean production is an approach to management that focuses on cutting out waste, whilst ensuring quality.
JIT
JIT is a common inventory management technique and type of lean methodology designed to increase efficiency, cut costs and decrease waste by receiving goods only as they are needed.
Quality assurance
The maintenance of a desired level of quality in a service or product, especially by means of attention to every stage of the process of delivery or production.
