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Management > Vocabulary for Test 3 > Flashcards

Vocabulary for Test 3 Flashcards

1
Q

Rate of return earned on a firm’s total assets invested. Computed as operating income divided by assets.

A

Return on Assets

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2
Q

Rate of return earned on the owner’s equity investment. Computed as net income divided by owner’s equity investment.

A

Return on Equity

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3
Q

An informal agreement between a borrower and a bank as to the maximum amount of funds the bank will provide at any one time.

A

Line of Credit

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4
Q

A commitment by a bank to lend up to a maximum amount.

A

Revolving Credit Agreement

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5
Q

Money loaned for a 5-10 year period, corresponding to the length of time the investment will bring in profits.

A

Term Loans

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6
Q

A loan for which items of inventory or other moveable property serve as collateral.

A

Chattel Mortgage

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7
Q

A long-term loan with real property held as collateral.

A

Real Estate Mortgage

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8
Q

The interest rate charged by commercial banks on loans to their most creditworthy customers.

A

Prime Rate (Base Rate)

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9
Q

The interest rate on loans that London-based banks charge other banks in London.

A

LIBOR (London Interbank Offered Rate)

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10
Q

A very large payment that may be required about half-way through the term over which payments were calculated, repaying the loan balance in full.

A

Balloon Payment

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11
Q

Bank-imposed restrictions on a borrower that increase the chance of timely repayment.

A

Loan Covenants

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12
Q

The owner can escape personal liability (personal assets) for the firm’s debts.

A

Limited Liability

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13
Q

Supplier-provided financing of inventory to a company, which sets up one of these for the amount. This is of short duration (30 days) and the amount of credit available depends on the type of firm and supplier’s willingness to extend credit.

A

Accounts Payable (Trade Credit)

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14
Q

An installment loan from a seller of machinery used by a business.

A

Equipment Loan

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15
Q

A line of credit secured by working capital assets.

A

Asset-Based Loan

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16
Q

Obtaining cash by selling accounts receivable to another firm.

A

Factoring

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17
Q

Obtaining cash from a lender who, for a fee, advances the amount of the borrower’s cost of goods sold for a specific customer order.

A

Purchase-Order Financing

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18
Q

Private individuals who invest in early-stage ventures.

A

Business Angels

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19
Q

Funds provided by wealthy private individuals, usually to small, local startups.

A

Informal Venture Capital

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20
Q

individuals who form limited partnerships for the purpose of raising venture capital from large institutional investors.

A

Formal Venture Capitalists

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21
Q

The SBA’s primary business loan program, which helps qualified small companies obtain financing when they might not be eligible through normal lending channels.

A

7(a) Loan Guaranty Program

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22
Q

An SBA loan program that provides long-term, fixed-rate financing for small business to acquire real estate or machinery and equipment.

A

Certified Development Company (CDC) 504 Loan Program

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23
Q

An SBA loan program that provides short-term loans of up to %50,000 to small businesses and not-for-profit child-care centers.

A

7(m) Microloan Program

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24
Q

Privately owned banks, regulated by the SBA, that provide long-term loans and/or equity capital to small businesses.

A

Small Business Investment Companies (SBICs)

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25
Q

An SBA program that helps to finance companies that plan to transform laboratory research into marketable products.

A

Small Business Innovative Research Program (SBIR)

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26
Q

A lender that uses funds from federal, state, and private sources to provide financing to small businesses in low-income communities.

A

Community-Based Financial Institution

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27
Q

The sale of a firm’s capital stock to select individuals.

A

Private Placement

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28
Q

The issuance of stock to be traded in public financial markets.

A

Initial Public Offering (IPO)

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29
Q

The processes used to create and deliver a product or service.

A

Operations

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30
Q

The planning and control of a conversion process that includes turning inputs into outputs that customers desire.

A

Operations Management

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31
Q

Manufacturing operations designed for short production runs of small quantities of items.

A

Job Shops

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32
Q

Manufacturing operations used to create unique but similar products.

A

Project Manufacturing

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33
Q

Manufacturing operations designed for long production runs of high volume, standardized products.

A

Repetitive Manufacturing

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34
Q

A form of repetitive manufacturing with output that more closely resembles a product stream than individual products.

A

Continuous Manufacturing

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35
Q

Manufacturing operations that usually involve computer-controlled equipment that can turn out products in smaller or more flexible quantities.

A

Flexible Manufacturing Systems

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36
Q

Operational strategies used to stimulate customer demand when it is normally low.

A

Demand Management Strategies

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37
Q

An index that determines the quantity to purchase in order to minimize total inventory costs.

A

Economic Order Quantity

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38
Q

A method of controlling inventory that uses a targeted service level, allowing statistical determination of the appropriate amount of inventory to carry.

A

Statistical Inventory Control

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39
Q

A system of classifying items in inventory by dollar velocity (purchase price X annual quantity consumed).

A

ABC Method

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40
Q

A method of cutting inventory carrying costs by making or buying what is needed just as it is needed.

A

Just-in-Time Inventory System

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41
Q

A method that provides for periodic counting of items in inventory.

A

Physical Inventory System

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42
Q

A method of inventory control based on the use of two containers for each item in inventory, one to meet current demand and the other to meet future demand.

A

Two-Bin Inventory System

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43
Q

The features of a product or service that enable it to satisfy customers’ stated and implied needs.

A

Quality

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44
Q

An all-encompassing management approach to providing high-quality products and services.

A

Total Quality Management (TQM)

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45
Q

The examination of a part or a product to determine whether it meets quality standards.

A

Inspection

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46
Q

A proactive approach to quality management that seeks to mistake-proof a firm’s operations.

A

Poka-Yoke

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47
Q

The use of random, representative portion of products to determine the acceptability of an entire lot.

A

Acceptance Sampling

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48
Q

Product or service parameters that can be counted as being present or absent.

A

Attributes

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49
Q

Measured parameters that fall on continuum, such as weight or length.

A

Variables

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50
Q

The standards governing international certification of a firm’s quality management procedures.

A

ISO 9000

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51
Q

A choice that companies must make when they have the option of making or buying component parts for products they produce, or the option of purchasing necessary services or providing them in-house.

A

Make-or-Buy Decisions

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52
Q

Contracting with a third party to take on and manage one or more of a firm’s functions.

A

Outsourcing

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53
Q

An organization in which small businesses combine their demand for products or services in order to negotiate as a group with suppliers.

A

Cooperative Purchasing Organizations (COOP)

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54
Q

A list of critical factors that help in accessing a supplier’s performance.

A

Supply Chain Operations Reference (SCOR) Model

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55
Q

An approach that emphasizes efficiency through elimination of all forms of waste in a company’s operations.

A

Lean Production

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56
Q

An approach that recognizes the interdependence of assets and activities and manages them to optimize the entire company’s performance.

A

Synchronous Management

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57
Q

Any point in the operations process where limited capacity reduces the production capability of an entire chain of activities.

A

Bottleneck

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58
Q

The most restrictive of bottlenecks, determining the capacity of the entire system.

A

Constraint

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59
Q

A specification of what a seller requires in exchange for transferring ownership or use of a product or service.

A

Price

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60
Q

An agreement between a buyer and a seller that allows for delayed payment for a product or service.

A

Credit

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61
Q

The sum of cost of goods sold, selling expenses, and overhead costs.

A

Total Cost

62
Q

An approach in which the total cost for a given period is divided by the quantity sold in that period to set a price.

A

Average Pricing

63
Q

The degree to which a change in price affects the quantity demanded.

A

Elasticity of Demand

64
Q

Demand that changes significantly when there is a change in the price of a product or service.

A

Elastic Demand

65
Q

Demand that does not change significantly when there is a change in the price of a product or service.

A

Inelastic Demand

66
Q

An approach based on setting a high price to convey an image of high quality or uniqueness.

A

Prestige Pricing

67
Q

Sales volume at which total sales revenue equals total costs and expenses.

A

Break-Even Point

68
Q

The difference between the unit selling price and the unit variable costs and expenses.

A

Contribution Margin

69
Q

An approach based on applying a percentage to a product’s cost to obtain its selling price.

A

Markup Pricing

70
Q

A technique that sets lower than normal prices to hasten market acceptance of a produce or service or to increase market share.

A

Penetration Pricing Strategy

71
Q

A technique that sets very high prices for a limited period before reducing them to more competitive levels.

A

Price Skimming Strategy

72
Q

A technique that uses a particular competitor as a model in setting prices.

A

Follow-the-Leader Pricing Strategy

73
Q

A technique that sets more than one price for a product or service in order to offer price concessions to certain customers.

A

Variable Pricing Strategy

74
Q

Charging more than one price when the customer’s profile suggests that the higher price will be accepted.

A

Dynamic (Personalized) Pricing

75
Q

A technique that sets a range of several distinct merchandise price levels.

A

Price Lining Strategy

76
Q

Financing granted by retailers to individuals who purchase for personal or family use.

A

Consumer Credit

77
Q

Financing provided by suppliers to client companies.

A

Trade Credit

78
Q

A line of credit that allows the customer to obtain a product or service at the time of purchase, with payment due when billed.

A

Open Charge Account

79
Q

A line of credit that requires a down payment, with the balance paid over a specified period of time.

A

Installment Account

80
Q

A line of credit on which the customer may charge purchases at any time, up to a pre-established limit.

A

Revolving Charge Account

81
Q

Privately owned organizations that collect credit information on businesses.

A

Trade-Credit Agencies

82
Q

Privately owned organizations that summarize a number of firms’ credit experiences with particular individuals.

A

Credit Bureaus

83
Q

A categorization if accounts receivable based on the length of time they have been outstanding.

A

Aging Schedule

84
Q

Bad debts divided by credit sales.

A

Bad Debt Ratio

85
Q

Marketing communications that inform and persuade consumers.

A

Promotion

86
Q

A blend of nonpersonal, personal, combined and special forms of communication aimed at a target market.

A

Promotional Mix

87
Q

A face-to-face meeting with a customer.

A

Personal Selling

88
Q

A systematic process of continually looking for new customers.

A

Prospecting

89
Q

A strategy to sell by informing, persuading, and reminding customers of the availability of superiority of a firm’s products or services.

A

Advertising

90
Q

A presentation designed to make potential customers aware of a specific product or service and create a desire for it.

A

Product Advertising

91
Q

A presentation of information about a particular firm, designed to enhance to firm’s image in order to make its product advertising more credible and effective.

A

Institutional Advertising

92
Q

An inclusive term for any promotional technique other than personal selling and advertising that stimulates the purchase of a particular product or service.

A

Sales Promotion

93
Q

A promotional strategy that provides visibility for a business at little or no cost.

A

Publicity

94
Q

The possibility of losses associated with the assets and earnings potential of a firm.

A

Business Risk

95
Q

The uncertainty associated with an investment decision.

A

Market Risk

96
Q

The uncertainty associated with a situation where only loss or no loss can occur.

A

Pure Risk

97
Q

Land and anything physically attached to the land, such as buildings.

A

Real Property

98
Q

Any property other than real property, including machinery, equipment, inventory, and vehicles.

A

Personal Property

99
Q

The cost of replacing personal property and rebuilding real property at today’s prices.

A

Replacement Value of Property

100
Q

An insurance term that refers to the depreciated value of property.

A

Actual Cash Value (ACV)

101
Q

A cause of loss, either through natural events or through the actions of people.

A

Peril

102
Q

A loss in which physical damage to property reduces its value to the property owner.

A

Direct Loss

103
Q

A loss arising from an inability to carry on normal operations due to a direct loss of property.

A

Indirect Loss

104
Q

Laws that obligate an employer to pay employees for injury or illness related to employment, regardless of fault.

A

Workers’ Compensation Legislation

105
Q

A contractual clause that requires one party to assume the financial consequences of another party’s legal liabilities.

A

Indemnification Clause

106
Q

Wrongful acts of omissions for which an injured party can take legal action against the wrongdoer for monetary damages.

A

Torts

107
Q

The typical standard of care, based on what a reasonable or prudent person would have done under similar circumstances.

A

Reasonable (Prudent Person) Standard

108
Q

Economic or noneconomic damages intended to make the claimant whole by compensating the claimant for the injuries of loss arising from the negligent action.

A

Compensatory Damages

109
Q

Compensatory damages that relate to economic loss, such as medical expenses and loss of income.

A

Economic Damages

110
Q

Compensatory damages for such losses as pain and suffering, mental anguish, and loss of physical abilities.

A

Noneconomic Damages

111
Q

A form of punishment beyond compensatory damages that intends to punish wrongdoers for gross negligence or callous disregard and to have deterrent effect.

A

Punitive Damages

112
Q

A negligent act that is the clear cause of damages sustained.

A

Proximate Cause

113
Q

A defect resulting from a problem that occurs during the manufacturing process, causing the product to subsequently not be made according to specification.

A

Manufacturing Defect

114
Q

A defect resulting from a dangerous design, even though the product was made according to specifications.

A

Design Defect

115
Q

A defect resulting from failure to convey to the user that hazards are associated with a product or to provide adequate instructions on safe product use.

A

Marketing Defect

116
Q

Risks that directly affect individual employees but may have an indirect impact on a business as well.

A

Personnel Risks

117
Q

Ways of coping with risk that are designed to preserve the assets and earning power of a firm.

A

Risk Management

118
Q

Minimizing potential losses by preventing, avoiding, and/or reducing risk.

A

Risk Control

119
Q

Keeping loss form happening.

A

Loss Prevention

120
Q

Choosing not to engage in hazardous activities.

A

Loss Avoidance

121
Q

Lessening the frequency, severity, or unpredictability of potential losses.

A

Loss Reduction

122
Q

Making funds available to cover losses that cannot be eliminated by risk control.

A

Risk Financing

123
Q

Buying insurance or making contractual arrangements that transfer risk to others.

A

Risk Transfer

124
Q

Financing loss intentionally, through a firm’s cash flows.

A

Risk Retention

125
Q

Coverage that designates part of a firm’s earnings as a cushion against possible future losses.

A

Self-Insurance

126
Q

Program that designate part of a firm’s earnings to fund a portion of employee medical coverage.

A

Partially Self-Funded Program

127
Q

A firm’s per employee limit on self-funding for medical claims.

A

Specific Stop Loss Limit

128
Q

A comprehensive limit on annual expenses should a number of employees reach the specific stop loss limit.

A

Aggregate Stop Loss Limit

129
Q

Identifying the specific perils covered in a property insurance policy.

A

Named-Peril Approach

130
Q

Stating in a property insurance policy that all direct damages are covered except those caused by perils specifically excluded.

A

All-Risk Approach

131
Q

A provision in a property insurance policy that requires the owner to have insurance for at least 80 percent of what it would cost to rebuild the building or replace the personal property.

A

Coinsurance Clause

132
Q

Coverage that reimburses a business for the loss of anticipated income following the interruption of business operations.

A

Business Interruption Insurance

133
Q

Coverage for general liability loss exposure, including premises liability, operations liability, product liability, completed operations liability, and personal and advertising injury liability.

A

Commercial General Liability (CGL) Insurance

134
Q

Coverage designed to provide liability and physical damage protection for a vehicle.

A

Automobile Insurance

135
Q

Coverage that provides benefits to employees injured at work.

A

Workers’ Compensation Insurance

136
Q

Coverage primarily against employee dishonesty.

A

Crime Insurance

137
Q

A business version of a homeowner’s policy, designed to meet the property and general liability insurance needs of some small business owners.

A

Business Owner’s Policy (BOP)

138
Q

A policy for small businesses that do not qualify for BOP that combines property insurance, commercial general liability insurance, business interruption insurance, and crime insurance.

A

Package Policy

139
Q

Coverage for medical care at hospitals, doctors’ offices, and rehabilitation facilities, that usually includes outpatient services and prescription drugs.

A

Health Insurance

140
Q

A managed-care network providing health insurance that is less expensive than that of a PPO but more limiting in choice of medical care providers.

A

Health Maintenance Organizations (HMO)

141
Q

A managed-care network providing health insurance that is more expensive than that of an HMO but offers a broader choice of medical providers.

A

Preferred Provider Organizations (PPO)

142
Q

Coverage that provides benefits to a firm upon death of key personnel.

A

Key-Person Life Insurance

143
Q

Coverage that provides benefits upon the disability of a firm’s partner or other key employees.

A

Disability Insurance

144
Q

A search firm that identifies qualified candidates for executive positions.

A

Headhunters

145
Q

The extent to which a test assesses true job performance ability.

A

Validity

146
Q

The consistency of a test in measuring job performance ability.

A

Reliability

147
Q

Financial incentive based on number of units produced.

A

Piecework

148
Q

Legislation prohibiting discrimination based on race, color, religion, sex, or national origin.
- employers of 15 or more people

A

Civil Rights Act

149
Q

Legislation that regulates the safety of workplaces and work practices.

A

Occupational Safety and Health Act

150
Q

Federal law that establishes a minimum wage and provides for overtime pay.
- No less than time and a half for working over 40 hours a week.

A

Fair Labor Standards Act (FLSA)

151
Q

Legislation that assures employees of unpaid leave for childbirth or other family needs.

  • Firms of 50 or more employees as much as 12 weeks unpaid leave, employed for at least 12 months and worked at least 1,250 hours over those 12 months
  • Must continue healthcare coverage
A

Family and Medical Leave Act

Management (33 decks)

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