Introduction to Business class12 November4.pdf
Introduction to Business class12 November4.pdf BA 101
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This 0 page Class Notes was uploaded by Jillian Rogers on Thursday November 5, 2015. The Class Notes belongs to BA 101 at University of Oregon taught by Tom Durant in Fall. Since its upload, it has received 25 views. For similar materials see Business 101 in Business at University of Oregon.
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Date Created: 11/05/15
Introduction to Business November 4 2015 Class 12 FOR FOUNDATIONEEEE Product Strategies Low Tech products Keep it in the ne cut circle ONLY revise to manage the age Ideal 3 Keep the age between 2 and 4 MTBF ideal at 20000 High Tech products Revise every year to keep on ideal spot Revise every year to manage AGE Ideal 0 Low Tech Product Strategy MTBF at 20000 Revise to keep acceptable at around 3 years Marketing Build awareness amp accessibility aggressively NOT lowest price highest price amp meet sales Production Automate aggressively and early Overtime is OK for now add capacity as needed Finance As you like High Tech Product strategy Revise every year ideal spot and age Add new products as you wish MTBF close to 23000 Marketing Build awareness amp accessibility aggressively Market is not as price sensitive as Low Tech Production Automation lowspeeds RampD times Add capacity as needed Finance As you like W Pricing Strategy Impact volume Impact contribution margin What is the difference between your price and unit cost contribution margin per unit Promotion and Sales Impact Increased period costs Impact Increased saes Remember In vest 2000 until 100 1400 per year maintains 100 once reached Production Automation Impact Increases RampD time for development Impact Expensive 4 per unit per level Impact Reduces labor costs Capac y Impact Meet demand or NOT Impact Determines overtimelabor costs Capacity takes a year to change NEXT year s demand NEXT year s costs Inventory You have a great low tech product You think you can sell about 2400 units What does that mean for inventory management Don t stock out have at least 1 unit left Not more than 60 days of inventory What is the most you can sell and the least you can sell and still meet inventory goals Hnance Issue stock Only to nance long term investments Harder to raise stock price Issue dividend Raises stock price usuay No investments to make Never more than EPS Retire stock Only if you have the cash and Want to improve the potential to increase stock price Issue bonds Only to nance long term investments Interest payments reduce pro t More loanshigher interest rates Retire bonds If you have extra cash after nancing growth Reduces interest payments and future rates Short term loans Take as needed for operations CLASS NOTES Ratios Know these three things about these ratios 1 2 3 What the acronym stands for ROS Return on Sales Formula return net income over sales Return Sales Common language de nition How much of sales is pro t Business Operations Return on Sales Net Income Sales How much of your sales dollar is pro t ROS measures ef ciency of operations To increase ROS decrease variableperiod costs raise price or both Asset Turnover Sales Total Assets A measure of activity How good are you at using your equipment and facility to turn Cash into inventory and Inventory into sales cash amp AR Return on Assets Net Income Total Assets The more quotstuff you have the more wealth you should can create 1000 net income 1000 assets vs 1000 net income 1000000 assets Of Interest to Owners Leverage Assets Owners Equity How much stuff did you gather using leveraging owners investment How good were you at using the owners investment to acquire assets Return on Equity ROE Net Income Owners Equity How much pro t did you create using the owners investment LEVERAGE EQUATION Total Assets Total Owner s Equity Leverage Total Assets Total Owners Equity Leverage measures the amount of debt versus the amount of equity owned in an asset It compares the amount you owe to the amount you own The lower the score ratio the less you owe Total Assets Total Owner39s Equity Therefore if Total Assets 5M Total Owner s Equity 1M Leverage 5 1 or 5 The company borrowed 4M of debt to purchase assets If Total Assets 5M Total Owner s Equity 4M Leverage 54 or 125 The company borrowed 1M of debt to purchase assets Sales Same as revenue EBIT Earnings Before Interest and Taxes Pro ts Net Income or net loss Cumulative Pro t All Net Income over time SGampA Selling general amp admin period costs Contribution Margin sales variable costs material and laborj Close Trading price at the end of the period Change How much higher lower than the last closing price Shares Outstanding shares how many have been sold Book value Owners equity Balance Sheet shares 188982252 EPS Earning per share Net income Shares 31012252 Dividend Cash payment per share to owners out of pro ts Stock Price Book Value owners equity of shares Owners equity is the initial investment common stock and reinvested net income retained earnings Earnings per Share net income share Wealth created for owners Dividend Cash distribution of pro t to owners Current Assets Current Liabilities What insight and value does this ratio provide Current AssetsInventory Current Liabilities What insight and value does this ratio provide Dif culty paying off short term loans Total Debt Total Assets HAVE TO BE ABLE TO CALCULATE THESE RATIOS 0 Return on Assets ROA 0 Return on Equity ROE Return on Sales ROS o Earning per Share EPS Turnover aka Asset Turnover Book Value Leverage Current Ratio 0 Quick or Acid Ratio 0 Debt to Asset Ratio
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