SBM Quarter Final Review

  1. ABC Method
    a method of classifying inventory items with categories which are of hiigh value, less costly, and/or low cost items.
  2. Angels
    Private investors who are willing to supply financing foe new and/or risky small venture startups.
  3. Book Value
    The cost of a fixed asset less accumulated depreciation.
  4. Consumerism
    The emphasis placed  on providing to customers  products and services that are safe, reliable, and honestly advertised;

    also, a social movement that seeks to strengthen the rights of consumers.
  5. Copyright 
    the registered right of a creator to reproduce, publish, and sell the work which is the product of the intelligence and skill of that person.
  6. Economic base
    the wealth produced in or near a community tht provides emmployment and income to the local population
  7. Economic Order Quntity
    the quantity to be purchased which minimizes total costs
  8. Entrepreneur
    One who organizes, manages, and assumes the risk of a business firm or venture
  9. Factoring
    obtaining cash before payments are received from customers by selling off one's accounts receivable to a third party.
  10. Goodwill
    an intngible asset such as the name of a funeral home;

    also, an intangible asset which enables  business  to earn a profit in excess of the normal rate of profit earned by other businesses of the same kind
  11. Human resource planning
    developing a comprehensive strategy for meeting future hman resource needs.
  12. Interdependence
    the dependency of business on one another
  13. Inventory
    those goods or stock of goods  which are held for resale
  14. Management
    the art of and science of motivating people toward the achievement of a goal.
  15. Market
    a group of potential customers possessing purchasing power and unsatisfied  needs.
  16. Market Survey
    a study that is used by a business to determine where  the potential customers re located
  17. New venture plan
    business plan
    a written description of a new idea that projects marketing, operaational, and financial aspects of proposed business
  18. Recruitment
    the process of forming a pool of qualified applicants for tasks that need to be filled
  19. Small Business Administraton
    the principal government agency concerned with the financing, operation, and management of small businesses
  20. Tangible asset
    a physical asset  that possesses  genuine value
  21. Intangible asset
    a type of aset that is not able to be physically touched but is retained by a small busines because of its genuine value appeal
  22. Trademark
    an intangible asset  that is a distinct name, sign, or symbol that the federal government grants exclusive rights to use for a specified period of time
  23. Working capital
    Circulating capital
    the difference between current assets and current liabilities;

    consisting of cash, inventories, and accounts receivable
  24. Advantages of internal sources of funding
    • 1. It is very low cost and may save money
    • 2. Careful management makes external sources more available
    • 3. Low risk
    • 4. Maximum flexibility
    • 5. You retain control
  25. Advantages of leasing over buying
    • a. avoidence of obsolescence
    • b. release of funds for working capital
  26. Building requirements
    • 1. Suitability for the intended use
    • 2. Customer accessability
    • 3. Internal and External traffic flow
    • 4. Room for expansion
    • 5. Internal and external appearance
    • 6. Environmental conditions
    • 7. Parking facilities
    • 8. Equipment or fixture requirements
  27. Equity
    Capital invested by owners

    Those that are generated by the invested capital of a firm
  28. Flooring
    A specialized debt vehicle used by certain retailers such as car, boat, and furniture dealers.

    In a flooring arrangement, the lender retains a security interest in the merchandise.

    The business pays a monthly interest charge and pays off the principal as each item is sold.

    Generally, flooring arrangements are revolving and can be renewed periodically.
  29. Management activities
    • Planning
    • Organizing
    • Motivating
    • Directing
    • Controlling
  30. Objectives of a retail store
    • 1. To properly display to maximize sales
    • 2. Customer conveniences and service
    • 3. Convenience and attractiveness to contribute to a customers continued patronage
    • 4. Efficiant layout contributes to the operation economy
    • 5. Protection of store merchandise and equipment against shoplifting
    • 6. Customer traffic flow is generally to the right
  31. Small business based on number of employees
    • Mining/Manufacturing - 500-1500
    • Wholesale - up to 500
    • Retail - 25-100
    • Service - 25-300
  32. Causes of business failure
    • Neglect - 3.9%
    • Disaster - 4.6%
    • Fraud - 2.2%
    • Economic causes - 63.5%
    • Financial causes - 24.1%
    • Strategy causes - 1.0%
  33. Manufacturing business
    Type of business activity
    Business that makes finished goods from raw materials by hand or machinery.
  34. Merchandising business
    Type of business activity
    Business that purchases finished goods for resale.
  35. Service business
    Type of business activity
    Business that provides a service instead of a product.
  36. unsecured term loan
    issued to a company that can prove it has financial strength & profitability to repay the loan

    owners contribute 40-50% of the required equity
  37. working capital
    circulating capital
  38. Market Value approach
    • Valuation based upon sale of similar business
    • 1. Depends upon similarity of business
    • 2. recent sales of like businesses
    • 3. Real estate appraisals rely extensively on this method
  39. Replacement cost approach
    • Asset-valuation that relies on replacement value of the business
    • 1. Attempts to find replacement value of tangible assets being purchased
    • 2. Starts with recent balance sheets
    • 3. method usually ignores intangible assets
    • 4. Difficult if small business has poor records; need good accounting recourds
  40. Liquidation value approach
    • Asset based method that requires the salvage value of the business's assets
    • 1. Provides a "minimum" value - worst case scenario
    • 2. Worst method for the seller
  41. Earnings approach
    • Valuation based on the business's past earnings record
    • 1. Centers on estimating the amount of potential income that may be produced by the business
    • 2. Capitalization of the average earning of the company (usually 5 year average).
    • 3. The average annual earnings are divided by expected rate of return
    • 4. Funeral home POR is 12.9% before taxes
  42. what is associated with an area's economic base?
    • employment
    • income
    • population  growth
  43. Various areas of a retail store differ markedly in sale value
    Most to Least valuable floor space in retail store
    • 1. Right front
    • 2. Center front & Right middle
    • 3. Left front center middle
    • 4. Left middle
    • 5. Least is back

    • 1. First floor (ground)
    • 2. Higher the floor, lower selling value
    • 3. Basement
Card Set
SBM Quarter Final Review
SBM Quarter Final Review