Intro to Business Chapter 9-12 – Flashcards
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financial ratio analysis
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Computing ratios that compare values of key accounts listed on their firm's financial statements
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liquid asset
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An asset that can quickly be converted into cash with little risk of loss
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liquidity ratios
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Financial ratios that measures the ability of a firm to obtain the cash it needs to pay its short-term debt obligations as they come due
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asset management ratio
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Financial ratios that measures how effectively a firm is using its assets to generate revenues or cash.
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financial leverage
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The use of debt in a firm's capital structure.
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leverage ratios
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Ratios that measure the extent to which a firm relies on debt financing in its capital structure.
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profitability ratios
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Ratios that measure the rate of return a firm is earning on various measures of investment.
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budgeted income statement
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A projection showing how a firm's budgeted sales and costs will affect expected net income.
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budgeted balance sheet
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A projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets.
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cash budget
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A detailed forecast of future cash flows that helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash.
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net working capital
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The difference between a firm's current assets and its current liabilities.
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cash equivalents
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Safe and highly liquid assets that many firms list with their cash holdings on their balance sheet.
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commerical paper
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Short- term (and usually unsecured) promissory notes issues by large corporations.
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U.S. Treasury bills (T-bills)
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Short-term marketable IOUs issued by the U.S. federal government.
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money market mutual funds
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A mutual fund that pools funds from many investors and uses these funds to purchase very safe, highly liquid securities.
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spontaneous financing
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Funds that arise as a natural result of a firm's business operations without the need for special arrangements.
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trade credit
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Spontaneous financing granted by sellers when they deliver goods and services to customers without requiring immediate payment.
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line of credit
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A financial arrangement between a firm and a bank in which the bank pre-approves credit up to a specified limit, provided that the firm maintains an acceptable credit rating.
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revolving credit agreement
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A guaranteed line of credit in which a bank makes a binding commitment to provide a business with funds up to a specified credit limit at any time during the term of the agreement.
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factor
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A company that provides short-term financing to firms by purchasing their accounts receivables at a discount rate.
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capital budgeting
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The process a firm uses to evaluate long-term investment proposals.
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time value of money
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The principle that a dollar received today is worth more than a dollar received in the future.
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present value
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The amount of money that, if invested today a given rate of interest, would grow to become some future amount in a specified number of time periods.
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net present value (NPV)
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The sum of the present values of expected future cash flows from an investment minus the cost of that investment.
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capital structure
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The mix of equity and debt financing a firm uses to meet its permanent financing needs.
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covenants
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Conditions lenders place on firms that seek long-term debt financing.
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retained earnings
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That part of net income that a firms reinvests.
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common stock
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The basic form of ownership in a corporation.
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capital gain
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The return on an asset that results when its market price rises above the price the investor paid for it.
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preferred stock
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A type of stock that gives its holder preference over common stockholders in terms of dividends and claims on assets.
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bond
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A long-term debt instrument issued by a corporation or government entity.
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maturity date
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The date when a bond will come due.
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par value (of a bond)
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The value of a bond at its maturity; what the issuer promises to pay the bondholder when the bond matures.
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coupon rate
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The interest paid on a bond expressed as a percentage of the bond's par value.
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current yield
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The amount of interest earned on a bond expressed as a percentage of the bond's current market price.
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secured bond
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A bond backed by the pledge of specific assets.
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serial bonds
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A series of bonds issued at the same time but having different maturity dates to spread out the repayment of principal.
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sinking fund
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Funds a firm sets aside and uses to call in bonds or purchase bonds in order to assure an orderly repayment of principal.
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callable bond
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A bond that the issuer can redeem at a given price prior to its maturity.
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convertible bond
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A bond that gives its holder the right to exchange it for a stated number of shares of common stock in some specified time period.
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primary securities market
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The market where newly issued securities are traded to raise additional financial capital
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second securities market
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The market where previously issued securities are traded.
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public offering
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A primary market issue in which new securities are offered to any investors who are willing and able to purchase them.
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private placement
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A primary market issue that is negotiated between the issuing corporation and a small group of accredited investors.
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initial public offering (IPO)
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The first time a company issues stock that may be bought by the general public.
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investment bank
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A financial intermediary that specializes in helping firms raise financial capital in primary markets.
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underwriting
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An arrangement under which an investment banker agrees to purchase all shares of a public offering at an agreed-upon price.
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accredited investors
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An organization or individual investor who meets certain criteria established by the SEC and so qualifies to invest in unregistered securities.
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New York Stock Exchange (NYSE)
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The largest securities exchange in the United States and the world. After its 2007 merger with a large European exchange.
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NASDAQ
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A major stock exchange that handles trades through a computerized network.
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market makers
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Investment companies that specializing in buying and selling specific stocks traded on the NASDAQ exchange or OTC market.
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NYSE Hybrid Market
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A trading system established by the NYSE in 2006 that allows investors to execute trades through the traditional floor trading or through a newer automated trading system.
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over-the-counter market (OTC)
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The market where securities that are not listed on exchanges are traded.
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electronic communications network (ECN)
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An automated, computerized securities trading system that automatically matches buyers and sellers, executing trades quickly and allowing trading when securities exchanges are closed.
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Securities Act of 1933
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The first major federal law regulating the securities industry.
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Securities Exchange Act of 1934
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A federal law dealing with securities regulation that established the securities and exchange commission to oversee the securities industry.
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Securities and Exchange Commission
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The federal agency with primary responsibility for regulating the securities industry.
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self-regulatory organizations (SROs)
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Private organizations that develop and enforce standards governing the behavior of its members.
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diversification
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A strategy of investing in a wide variety of securities in order to reduce risk.
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market order
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An order telling a broker to buy or sell a specific security at the best currently available price.
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limit order
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An order to a broker to buy a specific stock only if its price is below a certain level, or to sell a specific stock only if its price is above a certain level.
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mutual fund
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An investment vehicle that pools the contributions of many investors and buys a wide array of stocks or other securities
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exchange traded fund (ETF)
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Shares traded on securities markets that represent the legal right of ownership over part of a basket of individual stock certificates or other securities.
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stock index
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A statistic that tracks how the prices of a specific set of stocks have changed.
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Dow Jones Industrial Average
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An index that tracks stock prices of 30 large, well-known U.S. corporations.
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Standard & Poor's 500
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A stock index based on prices of 500 major U.S. corporations in a variety of industries and market sectors.
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NASDAQ Composite
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A stock index based on all domestic and foreign stocks listed on the NASDAQ exchange
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Net Asset Value (NAV)
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The value of a mutual fund's securities and cash holdings minus any liabilities; usually expressed on a per share basis.
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marketing
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An organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.
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utility
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The ability of goods and services to satisfy consumer "wants".
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marketing concept
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A business philosophy that makes customer satisfaction-now and in the future-the central focus of the entire organization.
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customer relationship management (CRM)
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Ongoing process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value.
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value
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A customer perception that a product has a better relationship than its competitors between the cost and the benefits.
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customer satisfaction
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When customers perceive that a good or service delivers value above and beyond their expectations.
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customer loyalty
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When customers buy a product from the same supplier again and again- sometimes paying even more for it than they would for a competitive product.
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marketing plan
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A formal document that defines marketing objectives and the specific strategies for achieving those objectives.
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market segmentation
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Dividing potential customers into groups of similar people, or segments.
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target market
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The group of people who are most likely to buy a particular product.
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consumer marketers (also known as business-to-consumer or B2C)
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Marketers who direct their efforts toward people who are buying products for personal consumption.
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business marketers (also known as business-to-business or B2B)
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Marketers who direct their efforts toward people who are buying products to use either directly or indirectly to produce other products.
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demographic segmentation
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Dividing the market into smaller groups based on measurable characteristics about people such as age, income, ethnicity, and gender.
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geographic segmentation
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Dividing the market into smaller groups based on where consumers live. this process can incorporate countries, cities, or population density as key factors.
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psychographic segmentation
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Dividing the market into smaller groups based on consumer attitudes, interests, values, and lifestyles.
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behavioral segmentation
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Dividing the market based on how people behave toward various products. The category includes both the benefits that consumers seek from products and how consumers use the product.)
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marketing mix
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The blend of marketing strategies for product, price, distribution, and promotion.
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environmental scanning
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The process of continually collecting information from the external marketing environment.
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market share
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The percentage of a market controlled by a given marketer.
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consumer behavior
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Description of how people act when they are buying, using, and discarding goods and services for their own personal consumption. It also explores the reasons behind people's actions.
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cognitive dissonance
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Consumer discomfort with a purchase decision typically for a higher priced item.
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business buyer behavior
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Describes how people act when they are buying products to use either directly or indirectly to produce other products.
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marketing research
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The process of gathering, interpreting, and applying information to uncover marketing opportunities and challenges, and to make better marketing decisions.
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secondary data
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Existing data that marketers gather or purchase for a research project.
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primary data
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New data that marketers compile for a specific research project.
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observation research
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Marketing research that does not require the researcher to interact with the research subject.
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survey research
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Marketing research that requires the researcher to interact with the research subject.
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green marketing
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The development and promotion of products with ecological benefits
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mass customization
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The creation of products tailored for individual consumers on a mass basis.
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product
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Anything that an organization offers to satisfy consumer needs and wants, including both goods and services.
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pure goods
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Products that do not include any services
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pure services
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Products that do not include any goods
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consumer products
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Products purchased for personal use or consumption
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business products
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Products purchased to use either directly or indirectly in the production of other products.
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product differentiation
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The attributes that make a good or service different from other products that compare to meet the same or similar customer needs
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quality level
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How well a product performs its core function
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product consistency
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How reliably a product delivers its promised level of quality
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product features
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The specific characteristics of a product.
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customer benefit
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The advantage that a customer gains from specific product features.
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product line
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A group of products that are closely related to each other, either in terms of how they work, or the customers they serve.
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cannibalization
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When a producer offers a new product that takes sales away from its existing products.
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brand
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A product's identity-including product name, symbol, design, reputation, and image-that sets it apart from other players in the same category.
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brand equity
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The overall value of a brand to an organization.
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line extensions
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Similar products offered under the same brand name.
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brand extension
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A new product, in a new category, introduced under an existing brand name.
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licensing
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Purchasing the right to use another company's brand name or symbol.
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cobranding
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When established brands from different companies join forces to market the same product.
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national brands
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Brands that the producer owns and markets.
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store brands
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Brands that the retailer both produces and distributes.
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product life cycle
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A pattern of sales and profits that typically changes over time.
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promotion
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Marketing communication designed to influence consumer purchase decisions through information, persuasion, and reminders.
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integrated marketing communication
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The coordination of marketing messages through every promotional vehicle to communicate a unified impression about a product.
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positioning statement
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A brief statement that articulates how the marketer would like the target market to envision a product relative to the competition.
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promotional channels
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Specific marketing communication vehicles, including traditional tools, such as advertising, sales promotion, direct marketing, and personal selling, and newer tools such as product placement, advergaming, and internet minimovies.
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product placement
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The paid integration of branded products into movies, television, and other media.
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advergaming
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A relatively new promotional channel that involves integrating branded products and advertising into interactive games.
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buzz marketing
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Active stimulation of word-of-mouth via unconventional, and often relatively, low cost tactics.
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sponsorship
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A deep association between a marketer and a partner (usually a cultural or sporting event) which involves promotion of the sponsor in exchange for either payment or the provision of goods.
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advertising
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Paid, non-personal communication, designed to influence a target audience with regard to a product service, organization, or idea.
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sales promotion
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Marketing activities designed to stimulate immediate sales activity through specific short-term programs aimed at either consumers or distributors.
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consumer promotion
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Marketing activities designed to generate immediate consumer sales using tools such as premiums, promotional products, samples, coupons, rebates, and displays.
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trade promotion
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Marketing activities designed to stimulate wholesalers and retailers to push specific products more aggressively over the short term.
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public relations (PR)
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The on-going effort to create positive relationships with all of a firm's different "publics," including customers, employees, suppliers, the community, the general public, and the government.
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publicity
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Unpaid stories in the media that influence perceptions about a company or its products
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personal selling
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The person-to-person presentation of products to potential buyers.
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push strategy
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A marketing approach that involves motivating distributors to heavily promote a product to the final consumers, usually through heavy trade promotion and personal selling.
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pull strategy
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A marketing approach that involves creating demand from the ultimate consumers so that they "pull" your products through the distribution channels by actively seeking them.
