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BA 101:Final
ROS - Return on Sales
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measures efficiency of operations
NET INCOME/ SALES
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Asset Turnover
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Measures efficiency of a company's use of its assets in generating sales revenue or sales income to the company
SALES/ TOTAL ASSETS
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Leverage
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How much stuff did you gather? how good were you at using owners leverage?
ASSETS/EQUITY
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Return on Assets
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NET INCOME/ TOTAL ASSETS
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Return on Equity
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How much profit did you create using the owners investments?
NET INCOME/ OWNERS EQUITY
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Equity
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owners ownership in the business
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EBIT
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Earnings before interest and taxes. Measure of a company's earning power
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Contribution Margin
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SALES - VARIABLE COSTS (material & labor) = contribution margin
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Book Value
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Net asset value of a company
TOTAL ASSETS - INTANGIBLE ASSETS
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SG&A
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Period costs, refers to selling, general, and administrative expenses
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Current Ratio
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CURRENT ASSETS/ CURRENT LIABILITIES
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Acid Ratio
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How quickly a company uses its near cash or quick assets to quickly extinguish/ retire current liabilities
CURRENT ASSETS - INVENTORIES/ CURRENT LIABILITIES
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Debt to total Assets Ratio
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MEASURES COMPANY'S FINANCIAL RISK
TOTAL DEBT/ TOTAL ASSETS
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Dividends
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payments made by corporations to share holders
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Working capital (where to find on balance sheet)
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found under current assets and current liabilities
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Sarbanes Oxley Act 2002
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established new standards of all US public companies and management
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Bond
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debt security. repay borrowed money with interest at fixed intervals
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Stock
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Share in the ownership of a company. A claim on companies assets and earnings
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Yield - reading a stock table
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money returns to the owner of a security
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"fixed"
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Won't quickly be turned into cash (buildings, land etc)
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"current"
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expected to be turned to cash within the year
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Dividend per share - reading a stock table
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indicates the annual dividend or payment per share
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Dividend Yield - reading a stock table
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The percentage return on the dividend
ANNUAL DIVIDENDS PER SHARE/ PRICE PER SHARE
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Price/earnings ratio - reading a stock table
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Current stock price/ Earnings per share from last 4 quarters
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Private enterprise
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business managed by independent rather than state work
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The role of government in Business Law
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Governments intervenes to ensure fair competition, private property, freedom of choice
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Common Law
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Law judges establish while deciding disputes
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Statutory Law
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Laws enacted by federal or state legislature
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Administrative Law
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state and federal administrative agencies
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Criminal Law
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government vs. individual: penalty is fine or jail
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Civil Law
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Two people: penalty is a fine
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Torts - Law
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Civil wrong inflicted on others
ie - when someone "hurts" another by manipulation
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Contract
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legally enforcable agreement between two or more parties
elements: legality, consideration, agreement
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Law of Bankruptcy
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To repay creditors in an orderly manner to the extent that the debtor has property available for payment
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2005 personal bankruptcy law
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Everyone must pay some or all of their financial obligation
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FTC
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Federal Trade Commision (false and deception advertising)
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CPSC
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consumer product safety
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OSHA
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Occupational safety and Health
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EEOC
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Equal opportunity
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EPA
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Environmental protection agency
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FDA
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Food & Drug Agency
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ICC
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interstate commerce
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SEC
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securities and exchange
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CPSA
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consumer product safety
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Working Capital
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Cash and accounts payable
Inventory
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Be able to read a cash flow statement
Break-even point
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Fixed cost + (variable costs*number sold) = total revenue
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Marketing Mix
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production, price, place, promotion, service
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Marketing strategy
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promote, create awareness, create an image, value and purpose, measure success
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Sole proprietorship: Creating your own business
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Pros: easy quick and affordable. full control with minimal administration, adaptable
Cons: only as good as your own credibility, risk and personal exposure, raising additional capital
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Partnership
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Voluntary, unlimited liability, mutual agency, limited life, limited access to money, single taxation, unregulated
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Corporation
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Separate legal entity, no single individual responsible, limited liability, limited stockholder power, unlimited life, easy access to capital, stockholders may lose control, government regulation, double taxation
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Corporation - domestic
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in state which it is incorporated
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Corporation - foreign
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Other state than state of incorporation
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Corporation - Alien
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Organized in one country, operated in another
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Preferred stock
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No vote, first claim on dividend, first claim on assets after debt.
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Common stock
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Voting rights
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S corporations
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Limited liability, single taxation, unlimited life restrictions: type and number of share holders
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Limited liability corporations
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Taxed like partnership, not limited to number of shareholders but limited to type
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Merger
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Two companies into one
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Acquisition
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One firm buys another
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Horizontal acquisition
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One firm buys another in the same industry
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Vertical acquisition
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One firm buys distribution channel firm
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Conglomerate acquisition
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One firm buys another of unrelated business
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