Intro to Business Final Exam

What is shown on the balance sheet

a snapshot of the company’s finances at ONE moment

What is the formula for balance sheet

Assets = Liabilities + Equity

What are assets

What the company owns (cash, equipment)

What are liabilities

What the company owes (debt)

What is equity

The owner’s share

What is the point of the cash flow statement

Tracks money entering and leaving the business (cash movement)

Why does the cash flow statement matter

Shows that a company can be profitable but still go bankrupt if they have no cash

What else is shown on cash flow statement

Liquidity

What is shown on the income statement

Measures profit over time

What is the formula for the income statement

Profit = Revenue - Expenses (also what is shown)

What is financial accounting

EXTERNAL reporting (public)

What does financial accounting use

Standardized reports (balance sheet, etc)

What is liquidity

Ability to pay short term debts

What does high liquidity mean

Lots of available cash (safe for business)

What does liquidity measure

How quickly an asset can be converted into cash without significantly affecting its price

What are dividends

Profit paid to shareholders

What is debt financing

Borrowing money (loans)

What are the conditions for debt financing

Must repay with interest

What is equity financing

Selling ownership (stocks)

What is the condition for equity financing

No repayment needed

What does IPO stand for

Initial Public Offering

What is IPO

First time company sells stock publicly; a company goes from private to public

Why do compabies do IPO

To raise large capital

What is a tradeoff for IPO

Lose some control

What does over leveraged mean

Too much debt so its risky

What is an example of over leveraged

A company struggling to repay loans

What does ROI stand for

Return on Investment

What does ROI mean

Measures how good an investment is

What is ROI used to measure

Performance

What is capital

Physical tools or resources

What are examples of capital

Buildings and machines

What is the board of directors

People elected by shareholders represent shareholders)

What are the roles of the board of directors

1. Big decisions

2. Hire or fire CEO

What are factors of a C-Corporation

1. Separate legal entity

2. Limited liability

3. Double taxation

What does LLC stand for

Limited Liability Company

What is an LLC

Mix of corporation and partnership

What are factors of an LLC

1. Hybrid structure

2. Limited liability + flexible tazes

What are factors of a siloed organization

1. Departments do not communicate

2. Leads to inefficiency & poor decisions

What are factors of middle management

1. Connects top management to employees

2. Translate strategy into action

What are the 4 P’s of Marketing

1. Product

2. Price

3. Place

4. Promotion

What is the value of marketing

What customer gets vs. what they give up like money, time, effort

What is product mix

All products a company sells

What is product differentiation

Making products unique

How can companies achieve product differentiation

1. Features

2. Design

3. Branding

What is product-market fit

Product satisfies customer needs; no demand leads to no fit

What happens to a company when they don’t have product-market fit

Business fails

What is brand awareness

How familiar consumers are with the brand; important for trust and sales

What is brand extension

New product in a new category but from the same brand

What is line extension

New product in the same category from the same brand

What is the difference between brand extension and line extension

Line extension is the same category while brand extension is a different category

What is co-branding

When two brands collaborate

What is positioning strategy

How a product is perceived in the market; luxury vs. affordable

What is target market

A specific group of customers a company aims for

What is market segmentation

Dividing the market into groups

What is demographic segmentation based on

Age, income, gender

What is psychographic segmentation based on

Lifestyle, values, and personality

What is commodity

Product with no differentiation so competes on price

What is an example for commodity

For example, a bushel of number 2 corn from one farmer is treated as exactly the same as a bushel from another farmer; they can be mixed together in the same storage bin

Gas

Wheat

What is SWOT Analysis

Strengths, weaknesses are internal and opportunities, and threats are external

What is distribution strategy

How a product reaches customers

What is distribution index

% of stores carrying the product

What is direct distribution

Goes from producer to consumer with no middle man

What is an example of direct distribution

Company website

What is selective distribution

Goes to a limited number of stores

What is selective distribution used for

Higher end products

What is the definition of a wholesaler

Middle man that buys goods then resells to retailers

What is multichannel retailing

Selling through multiple channels (example: online and in store)

What is a competitive environment

Level of competition in market

What is opportunity cost

Next best alternative given up

What does CSR stand for

Corporate Social Responsibility

What does CSR mean

A business’ responsibility to society; for example sustainability and ethical behavior

What does ethical work culture mean

An organization promotes ethical behavior/doing the right thing

What is a whistleblower program

A system to report unethical actions/report issues to protect employees

What does SEC stand for

Securitiies and Exchange Commission

What does the SEC do

1. Regulates stock market

2. Protects investors

What is intellectual property

Creations of the mind like ideas or inventions

What is licensing

Permission to use IP

What is franchising

Buying a business model where an established company licenses its brand, operating systems, and products to an independent owner in exchange for fees and royalties

What does TQM stand for

Total Quality Management

What is TQM

Continuous improvement in quality; focuses on efficiency and customer satisfaction

What is Theory X Management

Boss believes employees are lazy and need control