OSHA Exam 2 Flashcards
-……..the difference between current assets and current liabilities
Working capital(circulating capital)
-……..long term capital invested in the business
Fixed capital
cash invested by the owner(s) into the business
Personal(Equity capital)
borrowed or loaned capital invested into the business that must be repaid to creditors
Debt equity
-loans from family or friends-mortgage loan-commercial loan-SBA -trade credit:-venture capitalists:-angels:
Sources of funds
state or regional development commission
SBA
credit extended by one business to another to help finance distribution of producer’s goods
trade credit:
anyone who invests in or financially sponsors, a new business
venture capitalists:
private investors who are willing to supply financing for a new and /or risky small venture start-ups
angels:
Making Financing More Affordable-separate real estate ownership from the business ownership, so the new owner leases rather than purchase building assets -leasing equipment, furniture & fixtures (hearse, copy, phone)-selling off excessive inventories-factoring accounts receivable
$Location and Design-building requirements: -equipment/fixtures requirements-design factors & guidelines
suitability, client accessibly, internal/external traffic flow, room for expansion, internal/external appearance, environmental conditions, parking facilities(4 to 1: real estate need to be 4x larger than building for expansion, parking, etc)
-building requirements:
–buying-initial more capital outlay–leasing-initial less capital outlay
-equipment/fixtures requirements
–physical surroundings, visual spaciousness, customer service, buying habits, merchandise organization, merchandise display
-design factors & guidelines
Inventory RequirementDetermining needs, locating and selecting suppliesTypes of suppliers:ManufacturersWholesalesCooperative buying groups - business owned by users membersImporters
Considerations Concerning SuppliesCan they provide quality goods?Are those goods at desired prices, terms, & quantities needed?Do they provide reasonable protection of buyer’s interest?Do they supply good service beyond a mere delivery?Do they make provisions for merchandising/managerial/technical assistance?Do they have incentives for the families?
those goods or stock of goods which are held for resale
Inventory
The quantity to be purchased which minimizes total cost
Economic Order of Quantity
The number of times the average inventory has been sold or used up during a period.Handling slow moving merchandise
Inventory Turnover
the art of making the public aware of the services and merchandising that a business has for sale.
Advertising
a plan which provides inducement to potential purchasers of products or services
Sales promotion
Consumer Buying MotivesComfortConvenienceSecurityPrestige - frank e Campbell, HealthEconomy - most families buy in middle range
$Effects of AdvertisingName recognitionAttract’s an affinity to one’s business (close relationship to one’s business)Helps build a good reputation Helps build a preference before need
$Types of AdvertisingTelevision RadioNewspaper Magazines - both consumer & tradeBillboardsPublic transportationDirect mail - not effective, 2 to 3%Internet
Measurable Successful AdvertisingReturn of coupons Number of items soldMix of items sold (books, products, etc)Customer trafficOverall sales”Word of Mouth”
Pricing Policy & Strategy Basic ConsiderationsEconomics of pricing Nature of product/serviceCompetition
Factors that Influence Prices-competition. -desired clientele-legislation. -ship/freight charges-type of merchandise
$Pricing StrategyMarkup: difference between merchandise cost and selling price.Markdown: a reduction of original selling priceFrom chalkboard……$Unit pricing: 1 price (package deals)$By-unit: 1price for service & 1 price for casket$Functional: (broke down by services) facilities, vehicles, preparation, casket$Itemization: legally required form of pricing but can still have packaging deals & can give discount on package deal.
- Establish rapport (tell them what will transpire, the more you know-can help ease, find out position of remains, Ask if they have any questions before beginning process)2. Vital statistics legal info gathering3. Service selection: discuss types funeral home offers4. Merchandising selection: casket flower5. Financial arrangements
$Federal Trade Commission (FTC) “Funeral Rule” pg 263created 1982Implemented 1984Reviewed 1994$Triggering events - when someone start talking about pricing or merchandise (family or director), it triggers event where you HAVE TO SHOW price sheets.Texas Licensed or Provisional Licensed (WITH Licensed director) Funeral Director has to pick up body when family (face to face encounter) is present.
$Family Take Home Items:Texas Law General Price List (GPL) **keep a copy of all old price listsSigned contract”Facts About Funerals” (Texas Law Only)
$Family Take Home Items:$FTC Rule - National LawGeneral Price List (GPL) **keep a copy of all old price listsSigned contract
$Credit Policies and Practices Advantages:Sales increaseMore frequent patronizersPersonal relationshipClientele more interested in quality & serviceGoodwill is built upExchanges/adjustments easierCustomer information available
$Credit Policies and Practices Disadvantages:Losses from bad debts and fraudSome clients are slow to payCredit increase overheadIf credit is offered interest must be added to original costCapital in merchandise is tied up
Consumer Credit - using credit to make purchases is really just the opposite of saving money to buyAdvantages:ConvenienceOpportunity to establish a credit rating Bargain prices on sale merchandise
Consumer Credit - using credit to make purchases is really just the opposite of saving money to buyDisadvantages:Easy to overspendMost types of credit cost money in the form of interestMerchandise may cost more
Types of Consumer CreditInstallment credit - (closed end credit) balance of costly goods paid for in small monthly equal payments over a long period of time Open end credit - (revolving accounts) a line of credit that may be used repeatedly up to its limitCharge accounts - visa, mc, Amex
Evaluating a Credit RiskFactors to Consider:Credit applicationInvestigation/credit reportDetermining the credit limitEstablishing payment termsControlling the accountFollow up on delinquent accounts
Business Credit/Sales2/10, n/30MOM (middle of month)EOM (end of month)CWO (cash with order)CBD (cash before delivery)COD (cash on delivery)
Collection Policy Potential ProblemsThe older any account, the more difficult to collectAttempts to collect debts is time consuming Previously served client families tend to avoid the firm due to embarrassmentCollection ties up funds needed elsewhere in the business
End Operating Business Exam 2 Notes
