Terms Flashcards
Define state uncertainty
When one lacks information about the nature of the changing environment (emerge of new trends/competitors etc.)
Define effect uncertainty
When one is missing critical information of how changes in the environment will affect the organization
Define response uncertainty
When one lacks information about or does not understand what response options are available and the value of these, which is often experienced when immediate decisions are required
Define revenue
Has the purpose of assessing how customers view a product/service where increased revenue refers to a grown customer base
Define profitability
An organizations ability to survive
Define Return On Assets (ROA)
Indicates an organizations effectiveness in generating profits from their assets, and should be above 5%.
Define Return On Invested Capital (ROIC)
Assist in measuring the profitability of an organizations operations, and should be above 7%. Is decomposed by the profit margin and turnover rate.
Define Profit Margin
Illustrates how much each of the revenue collected translates into profit. The lower the profit margin, the higher the turnover rate would have to be to maintain a satisfactory ROIC
Define Turnover Rate
Indicates the organizations efficiency in managing its invested capital. A high turnover rate is attractive all else equal
Define Return On Equity (ROE)
Measures the owners return on their investments and specifies how fast an organization can grow without borrowing fund or selling shares, and should be min. 15%
Define Equity Ratio & Financial Leverage
Refers to the long-term health and have the purpose of indicating the bankruptcy risk. A low equity ratio combined with a high financial leverage indicates a small capital buffer for unforeseen events, which is a high long-term liquidity risk. An equity ratio less than 15% during the last 5 years indicates a high risk of going bankrupt
Define Current Ratio
Refers to the short-term health. The higher the ratio, the greater the likelihood that proceeds from discontinuation of current assets will cover current liabilities. Should be above 2% to indicate a low short-term risk
Define Validity and Triangulation
Validity refers to the identification of whether there is comparability between the research question and the objective of the research.
Triangulation refers to the use of more than one source or data in order to combine the different data to ascertain if the findings are consistent with each other.
Define Reliability
Refers to whether or not the data reflects actual facts and if the data collection techniques and analytical procedures would produce consistent findings if they were to be repeated. It indicates the measurement accuracy.
Define Adequacy
Involves an evaluation of whether the theory and data is sufficient in order to conduct conclusions and refers to the coherence between the data and conclusions
