Midterm Ba101

1. Stakeholder- A business is a collection of stakeholders, the business must account for each of its stakeholders. 2. Profit- Any activity that provides goods and services to consumers for the purpose of making a profit.

Because profit is what is left after all the bills are paid, and it is what the business has earned. W/out profit, a business would simply not go on.

Revenue- Cost = Profit

1. you must have a demand for your product. 2. The business you have must attract that demand. 3. you must control your costs. C<R

needs in business means people wants and desires.

1. self actualization 2. self esteem 3. love and belonging 4. safety and security 5. psycologival needs, goes 1-5 top to bottom of pyramid. In maselow's, you cant go to the next level until the prior is succeeded.

those with a legit interest in the sucess or failure of a business and the policies it adopts.

business tools that enables you to see a visual representation of your companies various stakeholders both internal and external.

individuals who reside inside the company. Example- employees, board members, and managers.

individuals and orginizations that are effected by the financial well being of a company. example- shareholders, customers, and suppliers.

free enterprise is capitolism. the competition is the dictator. there is limited government involvement. free enterprise also inlcudes private property rights.

business owners can expect to own their land, buildings and machines they keep everything but the taxes.

1. equity 2. externalities

1. monetary policy 2. fiscal policy 3. legal and regulatory policy

reduces or increases total supply of the money in the economy. Example- changing tax rates and public spending to curb total money supply

fed reserve system. has the abillity to decrease or increase the supply and raise or lower short term interest rates which would make it harder to brorow money. during a recession, feds will increase money supply to better the gov, taxation, and spending.

environment, safety, and competition.

1. demographics. 2. consumer tastes. 3. societys role in the gov.

diversity, aging, house structure

how society, busines, gov. and gloval environment interact.

include both leading and lagging - peices of data that are used to interpret posibilites and overal health of economy.

statistics that preceed economic events, they predict that next phase. example- consumer confidence.

because it brings creative destruction and long term growth.

idea that sustained long term growth is brough about innovation, even when the innovation "destroys' established businesses and practices. examples- 1. walmart with the barcode, 2. netflix at home and media streaming 3. containerizations- reducting costs for global trade

because it gives a competititve advantage by creating differentaiation, cost advange, and giving a time to market advantage.

explointing ideas,- transofrming invention into results or the process of conceiving and implementing something new, either product or process. Innovation is results, it is not simply just creating and inventing.

small inprovements to existing products.

most likely the cause of disruptive technology. but is also a new way of doing things that dirupt traditional methods.

creation and intro of a good or service that is new, or improved from previous goods.

innovation within the business.

A work or invention that is the result of creativity. I.P. has rights for which one may apply a patent, copyright, etc. IP is critical to innovation because it provides an economic incentive to invent/create. W/ IP the inventor is granted exclusivity with the full force of the law behind it.

1. abuse (patent trolls) 2. it is closed (makes it hard for people w/out patents to get involved) 3. ambiguity (infringement and economic harm.)

the use of purposive inflows and outflows of knowledge to accelerate internal innovation and expand markets for external use of innovation.

it means that although innovation is a production of something new, it alwasy is an immitation or an improvement of someone elses work.

they are good because sometimes it takes someone else to finish it to make one big great idea. great ideas can take a long time and must come with other hunches.

applying tools from the world of design and shifting focus to human behavior.

1. tolerance for risk and failure.2. commitment from top management 3. openness/diversity 4. empowerment and autonomy 5. desciplined 6. customer facing.

company that allows individual to run a location of their business. adv- fast distribution, and more capitol. dis- if the franchisee operates badly its on you, and it is legally hard

the individual that runs a location of a business that a certain company allows. adv- takes a bit of capitol, garunteed customers dis.- must report back to someone and other franchisees are competition.

small business are independently owned and operated and exerts little influence in its industry, it also has under 500 employees.

innovators

are lifystyle business and not innovators

indempendence, focus, flexibility, and the best one is independence.

high stress, under capitolization, managerial inexperience

Small Business Administration - government agency that offers amnagerial and financial assistance to small businesses. It carries an informational bank for small business owners, and is a cosigner for small business loans.

adv.- easy to start, terrible liability, taxes are cheap, future is never known.

pretty easy to start, poor liability, taxes are cheap, future is sometimes known.

strategic management and lean startup template for devolping new or documenting business models.

1. key partnners 2. key activities 3. value propositions 4. key resources 5. channels 6. customer segments 7. customer relations 8. cost structure 9. revenue streams

document setting out a business's future objective and strategies for acheiving them.

1. bootsraping- internal to you. 2. friends and familiy. 3. venture capitol- orginizations that are investors 4. angel investor- indiviual investors 5. crowd funding

to build companies and launch products quicks and to be more in line with customer needs lean startups build a minimum viable product that had just enoug features to be released and then is open to growht after customer feed back .

the idea that it is possible to make and do something good for the ocmmunity. these business don't operate for good of owner but social equality.

toms guyse chose to start a business instead of a charity, because he did not want to rely on donations.

an authorizaition granted by a gov or company to an individual or group enabeling them to carry our specified activities.

Hard to start, very limited liability, very high tax rate, very good with ability to continue through the future

hard to start, very limited liability, taxes are cheap, mediocre outlook on the future

seperate legal existence, limited liability of stockholders, transferable ownership rights, continuous life, government regulations, additional taxes, corporate managment.

liability of a firms ower for no more capitol than they have invested in the business

because of risk. Liability decreases risk and increases access to funding and capitol for business

attractive to companies facing competitive pressure.

when 2 companies combine to find a new company

purchase of one whole company by another

to gain complementary products, attain new markets and distribution channels, and to realize synergy(to realize a whole is greater than parts.)

the language of business. Accounting communicates info between the owners, managers, and investors. and evaluates a companies performance.

assets=liability and stockholder equality

this includes the income statements, owners equity, balance sheet, and cashflow statement. Summarizes past and evaluates future financial situation, this adheres to the GAAP

key role in helping managers carry out their responsibilites. supply financial info to answer internal q's and make decisions.

reports revenue when it is eared and expenses when they are incurred- GAAP approved

simple and easy. but not a good representation of matching revnue expenses. not GAAP approved.

revenue should be offset by expenses on the basis of their cause and effect relationship

written records that convey financial activities and conditions of a business. they measure an accounting period.

measure how well a firm usses its assets to generate each dollar of sales or cash. these ratios include receivables turn over, total asset turnover, and inventory turnover. investors and credit lendors use these.

measures value based on shares of stock. ratios included are earnings per share, market capitolization, price earnings ratio. Investors use this one.

income statement in which each line item is expressed as a percentage of sales/revenue. makes it easy to analyze a business compared to its peers and trends that are increasing/decreasing profitabiltiy.

the amount left over after deducting variable costs that "contribute" to covering fixed costs. Goal is to maximize contribution factor.

balance sheets are looked at in terms of strength. a strong balance sheet has a high ratio of assets to liabilities and a fair amount of liquidity.

provides services to slients for a fee, must have a CPA for public accounting.

works for a specific company preparing and analyzing reports for managers.

able to express an inbiased opinion reguarding the accuracy of clients financial sttements.

measures financial health of a company. Includes assets, liabilities and equity. assets are listed in order of liquidity.

measures performance of a company over an accounted period. includes revenue, expenses and profit.

inflows and outflows of cash in a business.

include current ratio and quick ratio. they both measure liquidity. creditors look at liquidity ratios, the higher the ratio the more liquid it is.

the speed at which a company can turn assets into cash to meet short term debt obligations.

amount of income/profit earned with the recourses used to generate it. includes gross margin, return on assets, profit margin, and return on equity. the higher the ratios the more profitable the company. investors and creditors use these.

info on how much debt an orginization has relative to other sources. these measure quantity of debt and quality. often used to asses risk. ratios are debt to total assets times interst earned, and debt to equity. creditors, investors and gov. officals use these ratios.

w extra (idle) cash- the goal is to invest.

concerned with most return and with capitol budgeting.

ratio(mix) of equity funding and retained earnings

loans, bonds anything that is a "temporary" or able to be paid off.

company with a lot of debt is said to be high lebt leveredged. it is neither good nor bad, it just is.

Risk

the way a cost responds to changes in output

costs that very with output example- direct labor, dicrect materials, sales commisions

costs that do not change with output. examples- executive salries, depreciation, rent

funds invested primarily in stocks

adv- retian control, interest is tax deductable, temporary, Disadv- cash flow problems, increased debt.

money or other liquid resources of a gov, business, group, or individual

a dollar today is worth more than a dollar tomorrow.

value is the ultimate goal of finance, it maximizes wealth of shareholders. it comes from profit and cash flow (long term) and quality management, growing deman, and emerging technology (short term) it is converted into a return by 1. dividends 2. net profit margins 3. earnings per share 4. marker capitolization 5. price earnings ratio

working capitol finance- is the managing of short term current assets and liabilites.

managements greatest single concern. goal is to extract or idle cash.

profits (accelerating inflows/decelerating outflows) , cash flow management, and TSMP

turn receivables- money is owed to a/r from customers who have promised to pay at a later date.

stretch payables - money owed to suppliers (accounts payable)

minimize inventory-items owned by a company that will be used in the production of a good/service.

project- generating cash position today, tomorow, monthly etc.

adv.-no obligation to pay owners, and no legal obligation to pay divdents. dis.- less control and not tax deductable

specific mis of long term debt and equity.

time value of money- money now at the present time is worth more than the same amount in the future, due to its potential earning capacity, so we eed to invest what is the the checking account.

social entrepreneur is a business person that go into business not to make profit but to help the community and social equiality. The owner of tom's shoes would be an example of one.

5 sources of possible funding for startups 1. bootlegging 2. friends and family 3. angel investors 4. venture capitol 5. crowd funding

debt to total assets- measure how much debt an orginization has relative to other sources. this measures quantity and quality of debt. quick ratio measures the liquidity. creditors look at this score.

strong balance sheet- strong balance sheets has a high ratio fo assets to liabilities and fair amount of liquidity.

to maximaize profits. this is the primary aim because it gives the biggest return for stakeholders.

Balance sheet, income statement, and statement of cash flows

measures financial health of a company, the 3 main sections are assets, liabilities and equity. it reports for points in times or point in time reports.

measures poerformance of a company and includes revenue, expenses, and profit. it is an accounting period report.

measures inflow and outflow of cash and inclludes analysis of operating, investing, and financing activities. This is an accounting period report.

capitol budgeting- planning process used to determine whether an orginizations long term investments such as new machines, products, and research development. this projects risk and the current market risk.

it increased inflow, and decreased outflow. Improving cash flow- making sure that cash is going into and out of the business at a specific rate. better management of A/r and inventory means that you are collected money owned by a company by its customers that have promised to pay at a late date which means you are gatering cash quicker than expected. With inventory, the less inventory you use tmeans that material and items owned by the company in production are being minized which is saving the company money.

stakeholder-those w a legit interest in sucess or failure of a business and policies it adapts.

innovation- diversity- creates conflicts of ideas because of unique life experience. different backgrounds and cultures bring better outcomes to almost any problem. the best leadership style for innovation is to have leaders who know how to foster and support creative thinking, enable the right type of risk taking, and understand the value of ideas from anyone. listening to customers improves innovation becasue they are the future of your business.

innovation can lead to a competitive advantage for business because it creates differentation, cost advantage, and market advantage. it also is simply necessary for survival.

For this I would choose sole proprietorship because I can boot leg, and use friends and family for the capitol i need. I can also seek an angel investor. Since I would manucature the product myself, the liabilty would be the worst issue in the world. The ease to start is great, the liabilty is awful, the taxes are good, and the future is awaful (unknown)