|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|
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|
|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|
|Keep leverage||1.8 to 2.8|
|Baylor Business: Leadership with...||integrity.|