Finance and Marketing Key Concepts: B2B, B2C, 4Ps, Financial Metrics

What does ROA stand for and what does it measure?

ROA stands for Return on Assets, and it measures a company's profitability relative to its total assets.

What does EPS stand for in finance?

EPS stands for Earnings Per Share, which indicates the company's profitability on a per-share basis.

Profit

A company's net income, or total revenue minus explicit costs

ROA

How efficiently a company uses its assets to generate profit

Owners equity

Represents the owners' claim to the company's assets after all liabilities (debts) have been paid off

ROE

The return investors receive for every dollar of equity invested

Debt-to-assets-ratio

Measures how much of the company is financed by debt vs. equity.

Assets

Liabilities + Owners Equity

Revenue

Unit Sales x Unit Price

Market Share

Your Unit Sales/ Total Industry Unit Sales

Gross Margins

Revenues - Costs of Sales / Revenues

Share Price

Business Value / Shares Outstanding

Marketing Spend

Spend 3 to 4 million on Trade Shows

Lockbox

An address, usually a commercial bank, for receiving payments in order to speed collections from customers.

Transaction balances

Cash kept on hand to pay normal daily expenses.

Line of Credit

A bank agrees to lend a specified amount of money to an organization upon request.

Secured Loans

Loans backed by collateral that the bank can claim if the borrowers do not repay the loans.

Unsecured loans

Loans backed only by the borrower's good reputation and previous credit rating.

Prime Rate

The interest rate that commercial banks charge their best customers (usually large corporations) for short-term loans.

Bond issues

Company sells bond to bondholder who receives interest payments until loan (bond) is repaid.