BUS1301TestOneLecturePowerpoints/Foundation
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Terms | Definitions |
|---|---|
 How many hours of work to master Foundation? | 100 hours |
| Corporate Sponsors for Class | ConocoPhillips and ExtraCo Banks and Salient |
| Who said "The purpose of business is to create a customer" | Peter Drucker |
| Course Objectives | 1.Business Literacy- WSJ 2.Business as an Integrated System- Foundation 3.Personal and Professional Ethics- BU Honor Code |
| Who said..."Whenever I hear someone curse, it's a sign to invent something." | David Levy |
| Higher automation means... | More machines doing the work- lower labor costs |
| The higher the MTBF... | The more reliable your products are- higher material costs, but customers like you more |
| The lower the MTBF... | The less reliable your products are- lower material costs. |
| Lower automation means... | Higher labor costs, but you can make changes faster |
| The four P's of marketing | 1. Product- Size, Performance, Reliability, & Age 2. Price 3. Place - Sales Budget determines Accessibility 4. Promotion - Promotion Budget determines Awareness |
| What is the #1 buying criteria for customers in the low tech segment? | Price. Then age, reliability, position |
| What is the #1 buying criteria for customers in the high tech segment? | Position. Then age, price, reliability |
| Which column tells you how well you hit the 4 P's of marketing on each product? | December Customer Survey Score |
| To Reach 100% Accessibility... | 1)You must have at least two products 2)Spend upwards of $2-3M per year in your Sales budget |
| To Reach 100% Awareness... | 1)Promo Budget is spent by product, not segment 2)Once 100% awareness is achieved, maintain at $1.4M per year. |
| Basic Forecasting | Last Year's Sales X Growth Rate = Next Year's Sales |
| The balanced scorecard | <30 points= Poor Performance Between 30-70= Normal Performance >70 points= Superior Performance |
| Who said "Expected versus actual. Expected versus actual. It's what we do all day long." | Brian Pokluda, Financial Analyst American Eagle Airline |
| The Basics of Business | 1.The purpose of a business is to create a customer. 2.The short-term goal of a business is to make a profit. 3.Great businesses have great margins. 4.Bad forecast. Bad pro forma. 5.Profit is a matter of opinion. Cash is a matter of fact. 6.Without debt, your firm will only be half as big as it can be. |
| "It's not who makes the most... | ...It's who keeps the most." |
| EBIT | Earnings before interest and tax |
| Balance Sheet | Shows what you own |
| Accounting Equation | Assets = Liabilities + Owner's Equity |
| Leverage | captures the relationship between what you own and how you financed it |
| Leverage Formula | Leverage = Total Assets/Total Equity Below 1.81 means "increase debt" Above 2.80 means "reduce debt" |
| Plant Improvements should match | Long Term Debt |
| Possible cash shortfalls should match | Current Debt |
| Financial advisors recommend keeping how many months of salary in an "Emergency Fund"? | 3 months worth |
| Days of Working Capital Formula | DoWC = (Current Assets - Current Liabilities) / (Sales/365) Current Liabilities= current debt+accounts payable |
| Phil Vischer | Veggie Tales voice, said to "never lose sight of the numbers", thought they would be the next Disney |
| The Business Cycle | Cash- Make Inventory-Sales- Collect accounts receivable and the process starts over again, maybe with new products in inventory |
| How much interest do you pay on an emergency loan? | your current debt rate plus an additional 7.5% interest |
| WHich expenditure drives customer awareness? | Promotion Budget |
| Your R&D decisions control which product attributes | Size, performance, age, reliability |
| Margin | The difference between price and what it cost to produce a product. |
| If your contribution margin is below 30%... | 1)Your pricing is too low, or 2)Your material costs are too high, or 3)Your labor costs are too high |
| HOW DO YOU LOWER YOUR COSTS? | 1)Lower your material costs (i.e., MTBF) 2)Lower your labor costs via automation |
| Market Cap Formula | Market cap= stock price X shares outstanding |
| "Profit is a matter of opinion... | cash is a matter of fact." |
| What kind of market is Foundation | Business to business |
| R&D page consists of | Size, reliability (MTBF), performance |
| MTBF range for low tech segment | 14000-20000 |
| MTBF range for high tech segment | 17000-23000 |
| Marketing page consists of | Price, sales and promo budget, sales forecasts |
| Production page consists of | production schedule, buy/sell capacity, automation, compliment/recruiting hours, margins |
| Raise contribution margin by | raising price, lowering cost of production |
| Finance page consists of | earnings per share, where you can issue or retire stock, issuing retiring long term debt, dividends, ending cash balance |
| One year bank note | Current Debt |
| ten year bank note | Long term debt |
| Plant utilization | 100%-180% |
| Keep leverage | 1.8 to 2.8 |
| Baylor Business: Leadership with... | integrity. |
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