ou_mba_b716_copy_20190212125432 Flashcards
How is Gross Profit calculated?
Sales - Cost of Goods Sold = Gross Profit
What is COGS?
Cost of Good Sold
How is COGS calculated for a trading organisation?
Inventory at Year Start + Product Bought During Year - Residual Inventory at Year End = COGS
How is COGS calculated for a manufacturing organisation?
Year Start Raw Material+ Raw Material bought during year - Year End Raw Material + Year Start Work-in-Progress - Year End Work-in-Progress + Year Start Finished Goods - Year End Finished Goods.= COGS
What does EBIT stand for?
Earnings Before Interest and Tax
What is another term for EBIT
Net Operating Income
How is EBIT calculated?
Gross Profit - Marketing Expenses - Administration Expenses - Depreciation - Other Operating Costs= EBIT
How is Profit before taxes from continuing operations calculated?
EBIT- Results from investments in other companies- Bank Loan interest= Profit before taxes from continuing operations
How is Profit for financial year calculated?
Profit before taxes from continuing operations-Tax payable- Net income from discontinued operations= Profit for financial year
What is Return On Sales?
EBIT as a percentage of sales
How is Return On Sales calculated?
ROS (in %) = (EBIT/Sales) * 100
What does the Asset Utilisation Ration show?
Revenues generated as a proportion of total assets used to generate said revenues
How is AUR calculated?
sales/capital employed
How is Capital Employed calculated?
Shareholders funds + long-term debt
What is ROCE
Return on Capital Employed.
What is ROS
Return on Sales
How is ROCE calculated?
ROCE (in %) = (EBIT/Capital Employed) * 100orROCE (in %) = (EBIT/Sales) * (Sales/Capital Employed) * 100Which is ROCE = ROS * AUR
Is AUR an effectiveness or efficiency ratio?
Efficiency
Is ROCE an effectiveness or efficiency ratio?
Both
Is ROIS an effectiveness or efficiency ratio?
Effectiveness
What is an ORPI?
Output-Related Performance Index
What type of orgnanisation might use an ORPI?
NFP/Service Sector
What does the Current Ratio show?
Level of current assets relative to current liabilities.
How is Current Ration calculated?
Current Ratio = current assets / current liabilities.
What does the Quick Ratio show?
Level of current assets relative to current liabilities. ignoring inventory in current assets
How is the Quick Ratio calculated?
Quick Ratio = (current assets - inventory) / current liabilities.
What is Working Capital?
margin of safety between current assets and current liabilities
How is Working Capital calculated?
Working Capital = current assets - current liabilities
What does Leverage show?
Relative dependence on debt and equity
How is Leverage calculated?
Leverage = (short-term debt + long-term debt) / shareholders’ funds
What does Gearing show?
European version of debt/ equity ratio
How is Gearing calculated?
((short-term debt + long-term debt) /(short-term debt + long-term debt + shareholders’ funds)) * 100
What is Creditor Days?
How long it takes an org. to pay its creditors
How is Creditor Days calculated?
Creditor Days = (Creditors / COGS) * 365 days
What is Stock or Inventory Days
How long stock/inventory takes to become output product/service
How is Stock (or Inventory) Days calculated?
Stock Days = (Stock / COGS) * 365 days
What is Debtor Days?
How long it takes an org to get paid.
How is Debtor Days calculated?
(Debtors / Sales) * 365 days
What is ROE?
Return On Equity
What does ROE show?
Net profit for the year as a proportion of shareholders’ funds - shows the organisation’s performance taking equity into account.
How is ROE calculated?
ROE (in %) = (Net Profit for Financial Year / Shareholders’ Funds) * 100
What does the Payout Ratio show?
Percentage of after-tax profits paid to shareholders as dividends
How is Payout Ratio calculated?
Payout Ratio (in %) = (Dividends / Profit for Financial Year) * 100
What does Interest Cover show?
Interest Cover shows whether an organisation is producing enough operating profit to cover its interest payments.
How is Interest Cover calculated?
Interest Cover = EBIT / Interest Expense
What is the P/E Ratio?
Profit/Earnings Ratio. Shows the market price as a proportion of earnings per share.
How is P/E calculated?
P/E Ratio = Market Price / Earnings Per Share
What are Fayol’s five distinct elements of management?
Planning,Organising,Commanding,Coordinating,Controlling.
What did Gulick and Urwick list as management activities?
Planning,Organising,Staffing,Directing,COordinating,Reporting,Budgetting.
What did Drucker define as the manager’s role?
Setting objectives,Organising,Motivating and Communicating,Measuring,Developing People.
What are Weber’s three sources of authority within an organisation?
Traditional authority eg monarchs, feudal aristocrats.Charismatic authority eg Gandhi or MandelaRational-Legal authority eg Managers
What where the three areas of flexibility in Atkinson’s flexible firm model?
Functional flexibility: people are given a range of skills and abilities and deployed and redeployed as needed. Opposite of scientific management.Numeric flexibility: uses short term contracts to meet changes in demand.Financial flexibility: people are paid for work done - piece work.
What was Ritzer’s McDonaldisation of Society?
Modern version of scientific management. Used in call centres etc. Efficiency driven. Eg having to answer calls within a number of rings.
What six groups did Fayol use to describe organisational activity?
TechnicalCommercialFinancialSecurityAccountingManagerial
How did Luthans et al define success
Speed of promotion.
How did Luthans et al define effective management?
High levels of satisfaction and commitment by subordinates combined with high quality and quality standards of performance.
What were Luthan’s four main areas of real managers’ activities?
Communication Traditional Management NetworkingHuman Resource Management
What activities did Luthan’s put under the heading ‘communication ‘?
Exchanging information Paperwork
What activities did Luthan’s put under the heading ‘traditional management ‘?
PlanningDecision-makingControlling
What activities did Luthan’s put under the heading ‘networking ‘?
Interacting with others.Socialising/politicking.
What activities did Luthan’s put under the heading ‘human resource management ‘?
Motivating/reinforcingDisciplining/punishingManaging conflictStaffingTraining/developing
What three sets of management functions did Buchanan and Huczynski describe?
Creating an agendaDeveloping peopleExecution
Sketch the three pulls model, describing pulls on a role.
What were Mintzberg’s management roles?
interpersonalFigureheadleaderliasioninformationalmonitordisseminatorspokespersondecisionalentrepreneurdisturbance handlerresource allocatornegotiator
How did Krantz and Maltz describe ‘role as given’?
Refers to role as defined by role influencers - the people in the org who define the expectations for what someone in a particular role does.
‘role as taken’ was described as what by Krantz and Maltz?
Refers to the view of the job holder regarding what is to be done and how.
Sketch Krantz and Maltz’s role as given/taken model
What is a product?
Anything that can be bought
What is a customer?
Someone who buys a product.
What is a consumer?
Someone who uses a product
What is marketing
Process of identifying customers and building meaningful exchanges with them.
How do Kotler and Armstrong define marketing?
“the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.”
How did Chartered Institute of Marketing define Marketing?
“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.”
How did the American Marketing Association define Marketing?
Marketing is the activity, set of institutions, and processes for creating, communications, delivering, and exchanging offerings that have value for customers, clients, partners and society at large.”
Who advocated that people buy value and not products?
Philip Cotler and Levitt (1969)
What did Zetihaml include in sacrifice?
Money, time, energy and effort.
What is opportunity cost?
The alternatives forgone to do/buy one specific thing.
How did Zeithaml define perceived value?
The consumer’s overall assessment of the utility of a product based on perceptions of what is received and what is given.
What did Webster say marketing involves in 1997?
Value defining processesValue developing processesValue delivering processes
What are the 4 P’s of the Marketing Mix?What is the fifth?
ProductPricePlacePromotion5:People
What were Lauterborn’s four Cs?
Customer needs and wants (product)Cost to the user (price)Convenience (place)Communication (promotion)
What are 5 benefits of market segmentation/targeting?
1) increased knowledge of target audience.2) easier to identify trends and influences.3) more efficient use of resources - expensive activities can be more targeted.4) more effective development and tailoring of marketing activities and features, pricing, comms etc can be tailored.5) increased potential for setting achievable and realistic objectives e.g. sales targets.
What are the five general criteria by which operations performance is measured?
QualityFlexibilitySpeedDependabilityCost
What are the seven forms of waste originally identified by Toyota?
Over-productionWaiting timeTransportationProcess (or over-processing)InventoryMotionDefectives
What is PDCA?
PlanDoCheckAct
What is ‘operations’?
The ops functions of an org. Comprises the resources and processes arranged for production and delivery of good/services to the customers.
What is ‘operations management’?
Managerial activity comprising the activities, decisions and responsibilities of designing, managing and improving the production and delivery of goods/services.
Sketch Porter’s Value Chain model
What are the five approaches for improvement?
Factory FocusProcess FlexibilityInformation TechnologyIncreased Customer Involvement in the Service ProcessIncreased use of Customer Feedback to improve Service Quality
What did Smith say in shareholder theory?
a manager’s primary duty is to maximise shareholder returns
What did Smith say in stakeholder theory?
A manager’s duty is to balance the shareholders’ financial interest against the interests of other stakeholders such as employees, customers and the local community, even if it reduces shareholder return
How did Sternberg critique stakeholder theory - as cited in Phillips et al?
“effectively destroys business accountability … because a busines that is accountable to all is actually accountable to none”