W1: Case study for financial accounting metrics

Question 1

sales “funnel” ?

Answer 1

The metrics used to track the steps in the process of converting individuals or Companies with a potential interest in one’s product or service into paying customers.

Question 2

secured creditors (chủ nợ có đảm bảo)

Answer 2

Entities, such as banks, with the contractual right to seize certain assets (“secured” assets) if they are not paid on time.

Question 3

spoilage ?

Answer 3

The portion of inventory of a perishable product that becomes unsaleable because it is held too long

Question 4

variable costs

Answer 4

Costs that go up when production increases and go down when production decreases

Question 5

volatility of returns - (Mức lợi suất dao động)

Answer 5

The standard deviation of a time series of investment returns. Volatility (độ biến động) Lợi nhuận kỳ vọng của 1 khoản đầu tư là quan trọng nhưng mức độ rủi ro cũng quan trọng không kém. Cùng mức lợi suất kỳ vọng là 10%, nhưng khoản đầu tư có lợi suất dao động 9% -11% sẽ được ưa thích hơn khoản đầu tư có lợi suất dao động từ -50% đến 70% do ổn định/ ít rủi ro hơn. Thước đo rủi ro thường được sử dụng là volatility (độ biến động của return so với mức return kỳ vọng (10%), bằng standard deviation/SD (độ lệch chuẩn) của return. Vậy volatility là 1 trường hợp đặc biệt của standard deviation. Lưu ý: Trong 2 ví dụ trên, volatility không bằng 1% hay 60%, đây là mức biến động tối đa. Volatility bằng trung bình các mức biến động nên sẽ nhỏ hơn mức này. Lưu ý 2: Ngoài standard deviation, volatility còn được đo lường bằng variance (phương sai).

Question 6

wastage

Answer 6

The portion of inventory that becomes unsaleable because it is damaged or lost before sale.

Question 7

balance sheet (bảng cân đối)

Answer 7

The document that shows a company’s assets, liabilities, and shareholder’s equity. Traditional financial accounting uses three systems: profit and loss, cash flow, and the balance sheet, to capture all changes in economic value.

Question 8

Content Delivery Network (CDN) -

Answer 8

Companies that provide edge caching for a fee. The best-known is Akamai. mạng lưới cung cấp nội dung. Với hệ thống các máy chủ được đặt tại nhiều nơi trên thế giới sẽ giúp tối ưu tốc độ website cho người truy cập, cải thiện chất lượng website.

Question 9

dynamic metrics -

Answer 9

Defined here as Business metrics that show significant change over time intervals of a month or less, and can be impacted directly by changes in business processes.

Question 10

edge-caching

Answer 10

Paying third parties (Content Delivery Networks) to locate copies of one’s web content on servers physically nearer to customers and other visitors.

Question 11

managerial accounting -

Answer 11

Accounting used to determine the profitability of individual products and services and make management decisions.

Question 12

net cash flow

Answer 12

• The change in actual cash on hand held by a business over a particular time interval.

Question 13

“noisy” vs “twitchy” metrics -

Answer 13

• Informal terms to contrast aggregate metric - which many factors impact - and highly focused metrics that can easily be impacted by changing a single factor.

Question 14

page-load time -

Answer 14

How much time is required for a web page to be com plete and usable from the point of view of a visitor. profits and losses - Accounting measure of whether a company i

Question 15

profits and losses -

Answer 15

Accounting measure of whether a company is generating net economic value (gtrị ktế dongf), after including capital investment and other sunk costs.

Question 16

why do you say revenues as an “aggregate number”? (số tổng hợp)

Answer 16

Total revenues are an “aggregate” metric because:

they reflect sales across all products and services, and combine new sales and long-term contracts, and involve an element of random variation. For this reason, even big process changes for the better or worse may be hard to detect in total revenues.

Question 17

shareholder’s equity

Answer 17

• Also known as “stockholder’s equity” - the accounting value of a company’s assets minus its liabilities.

Question 18

traditional metrics

Answer 18

• As defined here, Business metrics related to financial and managerial accounting, in particular those used for required quarterly or annual financial reporting. In contrast to dynamic metrics, traditional metrics rarely, if ever, show significant changes within the time interval of a single month, and as aggregated measures, are dicult to impact with isolated business changes.

Question 19

accounts receivable

Answer 19

• Monies a company’s customers owe it for products or services we have already delivered.

Question 20

aged receivables -

Answer 20

Tracking how long cash owed is overdue.

Question 21

cash flow -

Answer 21

How cash “on hand” - meaning in the Company’s bank accounts - has changed over a give time interval.

Question 22

depreciation

Answer 22

• Accounting methodology for reducing the value of a capital investment over time and allocating that expenditure to products or services produced.

Question 23

fixed costs -

Answer 23

Costs that do not increase or decrease with small changes in production. An example are salaries for current full-time employees.

Question 24

general and administrative (G&A) expenses -

Answer 24

Overhead not directly tied to individual products or services - for example, rent, utilities, insurance, required business licenses, salaries of central oce employees.

Question 25

negative float -

Answer 25

Needing working capital to make and deliver products or services for which one is paid cash later.

Question 26

net 60 -

Answer 26

Paying cash for products or services 60 days after they are received. “Net 30” and “net 90” are also common terms.

Question 27

net earnings -

Answer 27

Synonym for profits.

Question 28

positive float -

Answer 28

Holding customer cash for a product or service to be delivered later. The classic example is insurance.

Question 29

profit -

Answer 29

The positive dierence between revenue and expenses, using standard accounting methods for capital expenditures.

Question 30

straight line depreciation

Answer 30

• Depreciation of the same amount over each of several time periods: for example, 20% reduction in value over each of 5 years

Question 31

to book sales -

Answer 31

To record sales at the time when, under accounting rules, a mutual contractual obligation is created.

Question 32

useful life?

(thời gian sử dụng hữu ích of 1 tài sản) - theo IFRS

Answer 32

• The time interval over which a capital investment is allocated
• in theory, it corresponds to the time required for a piece of equipment to wear out and need to be replaced.

Question 33

burn rate -

Answer 33

Actual net negative cash flow (dòng tiền âm) for a time interval, typically a month, or projected net negative cash flow for the next month

Question 34

cost of goods sold (giá vốn hàng bán)

Answer 34

• Costs that are allocated to each unit of production.

Question 35

economies of scale (tính kinh tế theo quy mô)

Answer 35

• Rising marginal profits on higher sales and production volumes - due to fixed costs and capital investment being high compared to variable costs

Marginal profits: LN cận biên

Question 36

factoring (accounts receivable financing) - tk phải thu

Answer 36

A short-term loan secured by accounts receivable

Question 37

marginal profit

Answer 37

• Profit per one additional unit of production.

Question 38

runway (for a company) -

Answer 38

Net cash on hand divided by current monthly burn rate gives the number of months a company can survive under present conditions

Question 39

working capital (credit line) (vốn lưu động)

Answer 39

• Money provided by a bank or a factor - or made available if needed - to cover negative float.

Question 40

one of the most common triggers” for profitable companies to run out of cash is?

Answer 40

uncontrolled or unplanned sales growth.” Egger’s Roast Coffee Case Study Part 2 explains in detail – through a tragic example - the mechanics of how this can happen.

Question 41

One online shopping business found that 20% of shoppers quit during the checkout process without buying anything. A good next step would be:

1 / 1 point

Send those customers a letter, email, or text with detailed instructions on how to use the checkout feature.

When the reason that shoppers are dropping out of an online checkout is unknown, concluding that shoppers don’t understand the process well enough, are having second thoughts because prices are too high, or are simply irritated and need an apology, would be nothing more than a guess. A much better approach is to determine the real factors influencing dropout rates. This can be done through randomized experiments known as “A/B” Testing.

Shoppers are randomly assigned to one of two groups: a group using the current process, and a group where minor changes are made to the process which may improve customer retention. Changes that result in significant improvement are kept, and others discarded. The video, Revenue Metrics: Amazon.com as a Leading Example of the Use of Dynamic Metrics – Part 2 at 3:23-4:46 discusses Amazon as an example of the sophisticated use of A/B testing for revenue optimization.

Offer discounts to the 80% of customers who complete checkout as an encouragement for their patience.

Add a small pop-up window on the checkout page with the texts “We are sorry if you are having trouble when checking out. We will fix it later.”

Answer 41

long one