OSHA Exam 2

Question 1

-……..the difference between current assets and current liabilities

Answer 1

Working capital(circulating capital)

Question 2

-……..long term capital invested in the business

Answer 2

Fixed capital

Question 3

cash invested by the owner(s) into the business

Answer 3

Personal(Equity capital)

Question 4

borrowed or loaned capital invested into the business that must be repaid to creditors

Answer 4

Debt equity

Question 5

-loans from family or friends-mortgage loan-commercial loan-SBA -trade credit:-venture capitalists:-angels:

Answer 5

Sources of funds

Question 6

state or regional development commission

Answer 6

SBA

Question 7

credit extended by one business to another to help finance distribution of producer’s goods

Answer 7

trade credit:

Question 8

anyone who invests in or financially sponsors, a new business

Answer 8

venture capitalists:

Question 9

private investors who are willing to supply financing for a new and /or risky small venture start-ups

Answer 9

angels:

Question 10

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

Answer 10

$Location and Design-building requirements: -equipment/fixtures requirements-design factors & guidelines

Question 11

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)

Answer 11

-building requirements:

Question 12

–buying-initial more capital outlay–leasing-initial less capital outlay

Answer 12

-equipment/fixtures requirements

Question 13

–physical surroundings, visual spaciousness, customer service, buying habits, merchandise organization, merchandise display

Answer 13

-design factors & guidelines

Question 14

Inventory RequirementDetermining needs, locating and selecting suppliesTypes of suppliers:ManufacturersWholesalesCooperative buying groups - business owned by users membersImporters

Answer 14

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?

Question 15

those goods or stock of goods which are held for resale

Answer 15

Inventory

Question 16

The quantity to be purchased which minimizes total cost

Answer 16

Economic Order of Quantity

Question 17

The number of times the average inventory has been sold or used up during a period.Handling slow moving merchandise

Answer 17

Inventory Turnover

Question 18

the art of making the public aware of the services and merchandising that a business has for sale.

Answer 18

Advertising

Question 19

a plan which provides inducement to potential purchasers of products or services

Answer 19

Sales promotion

Question 20

Consumer Buying MotivesComfortConvenienceSecurityPrestige - frank e Campbell, HealthEconomy - most families buy in middle range

Answer 20

$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

Question 21

$Types of AdvertisingTelevision RadioNewspaper Magazines - both consumer & tradeBillboardsPublic transportationDirect mail - not effective, 2 to 3%Internet

Answer 21

Measurable Successful AdvertisingReturn of coupons Number of items soldMix of items sold (books, products, etc)Customer trafficOverall sales”Word of Mouth”

Question 22

Pricing Policy & Strategy Basic ConsiderationsEconomics of pricing Nature of product/serviceCompetition

Answer 22

Factors that Influence Prices-competition. -desired clientele-legislation. -ship/freight charges-type of merchandise

Question 23

$Pricing StrategyMarkup: difference between merchandise cost and selling price.Markdown: a reduction of original selling priceFrom chalkboard……$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.

Answer 23

1. 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

Question 24

$Federal Trade Commission (FTC) “Funeral Rule” pg 263created 1982Implemented 1984Reviewed 1994$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.

Answer 24

$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)

Question 25

$Family Take Home Items:$FTC Rule - National LawGeneral Price List (GPL) **keep a copy of all old price listsSigned contract

Answer 25

$Credit Policies and Practices Advantages:Sales increaseMore frequent patronizersPersonal relationshipClientele more interested in quality & serviceGoodwill is built upExchanges/adjustments easierCustomer information available

Question 26

$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

Answer 26

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

Question 27

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

Answer 27

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

Question 28

Evaluating a Credit RiskFactors to Consider:Credit applicationInvestigation/credit reportDetermining the credit limitEstablishing payment termsControlling the accountFollow up on delinquent accounts

Answer 28

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)

Question 29

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

Answer 29

End Operating Business Exam 2 Notes