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Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
Encyclopedia general business terms
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Encyclopedia general business terms
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1296 terms and definitions on General Business Management.

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Encyclopedia general business terms

  1. 1. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. ManagementA to Z Keyword Definition Topic General An absolute advantage exists when a nation or economic region is able to produce a good or service more efficiently (using the A Business Terms Absolute Advantage same amount of resources) than a second nation or region. General Accelerated Tariff A Business Terms Elimination An increased rate of reduction of import duties at a faster rate than what was originally planned or decided upon. A record of a business transaction. When you buy something on credit, the company you are dealing with sets up an General A Business Terms Account "account". This means it sets up a record of what you buy and what you pay. You will do the same thing with any customers to whom you extend credit. General A Business Terms Account payee only Words often written on crossed cheques, which direct the bank to pay the cheque only to the bank account of the payee. General A Business Terms Accountant A qualified person who is skilled at managing and analysing business financial records. General A Business Terms Accounting Exposure Changes in a corporations financial statements as a result of changes in currency values. Also known as translation exposure. General Is money you owe to suppliers and other business creditors as a result of purchases of stock and other expenses such as A Business Terms Accounts payable overheads and taxes. General A record of what is owed to you. All of the credit "accounts" - the record of what each customer owes you - taken together are A Business Terms Accounts receivable your "accounts receivable". Page 1 of 149
  2. 2. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. Standard business accounting, which assumes there will be Accounts payable (Bills to be paid as part of the normal course of business) and/or sales on credit (Sales made on account; shipments against invoices to be paid later) , as opposed to Cash- General Accrual-based Basis only. For example, most businesses have regular bills such as rent, utilities, and often inventory purchase which are not A Business Terms accounting paid for at the exact moment of purchase, but are invoiced. Most businesses will also not be able to collect on all of their sales immediately in cash, but must bill the purchaser or wait for payment on at least some percentage of their sales (the exact percentage varies by industry). Total accumulated depreciation reduces the formal accounting value (called book value) of assets. Each month’s accumulated General Accumulated A balance is the same as last month’s balance plus this month’s depreciation. Business Plan Pro shows accumulated Business Terms depreciation depreciation in the Balance Sheet. General Short-term assets minus accounts receivable and inventory, divided by short-term liabilities. This is a test of a company’s ability A Business Terms Acid test to meet its immediate cash requirements. It is one of the more common business ratios used by financial analysts. General A Business Terms Acquisition costs The incremental costs involved in obtaining a new customer. General In an acquisition of assets, one firm acquires the assets of another company. None of the liabilities supporting those asset are A Business Terms Acquisition of Assets transferred to the purchaser. General A Business Terms Acquisition of Stock In an acquisition of stock, one firm buys the equity interest of another firm. General A Business Terms Acquisition Premium In a merger or acquisition, the difference between the purchase price and the preacquisition value of the target firm. In relation to the GST, acquisitions include the things you buy (goods, services and anything else) for your business. They also General A Business Terms Acquisitions include many other transactions, such as obtaining advice or information, taking out a lease of business premises or hiring business equipment. Page 2 of 149
  3. 3. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Active Fund An investment approach that actively shifts funds either between asset classes (asset allocation) or between individual A Business Terms Management securities (security selection). General A Business Terms Active Income In the U.S. tax code, income from an active business as opposed to passive investment income. General Activity Based An accounting method that allocates costs to specific products or services or activities such as production, delivery or A Business Terms Costing (ABC) maintenance based on breakdowns of cost drivers. General A Business Terms Actuary A mathematician whose work is mainly concerned with insurance and finance. General According to value. Applied to customs duty, it means a percentage charge on the value, rather than the weight or quantity of A Business Terms Ad valorem goods. General A Business Terms Ad Valorem Tariff A tariff assessed as a percentage of the value of an import. General An organization that is able to respond to and address changes in their market, their environment, and/or their industry to A Business Terms Adaptive firm better position themselves for survival and profitability. General Adjusted Present A Business Terms Value A valuation method that separately identifies the value of an unlevered project from the value of financing side effects. General Trading method in which the buyer pays for the goods before they are sent out , method is used when buyer is of unknown A Business Terms Advance Payment credit worthiness. Page 3 of 149
  4. 4. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General It is also called "marine adventure." It is a term of art in the marine insurance business. All insured cargo owners and every A Business Terms Adventure shipper on that vessel are part of the adventure. General Capital needed in the earliest stages of the venture’s creation before the product or service is available to be provided. (As A Business Terms Adventure capital mentioned in Entrepreneurship for the ’90’s by Baty.) A product or service may generate additional revenue through advertising if there is benefit from creating additional awareness, General Advertising A Business Terms opportunity communicating differentiating attributes, hidden qualities or benefits. Optimizing the opportunity may involve leveraging strong emotional buying motives and potential benefits. General A Business Terms Advising Bank Bank, usually in the country of the seller, whose primary function is to authenticate the letter of credit and advise it to the seller. General Used to indicate that a shippers agent or representative is not empowered to make definitive changes or adjustments without A Business Terms Advisory Capacity approval of the group or individual represented. General A Business Terms Affidavit a declaration in writing on oath, made before a person legally qualified for the purpose. African General The ABD Group is 1 of 4 major regional developmental banks currently operating in the global economy; it is headquartered in A Business Terms Developmental Bank Abidjan, Cote dIvoire. Group (ABD Group) The African Union is an organization for regional, social and economic cooperation. It consists of 53 member nations in Africa General A Business Terms African Union (AU) and was derived from the OAU (Organisation of African Unity). Its goal is to unify Africa and promote peace, security, and stability on the continent through social and economic cooperation. African, Caribbean, The African, Caribbean and Pacific Group of States (ACP) is an organisation created by the Georgetown Agreement in 1975. It General A Business Terms and Pacific Countries is composed of African, Caribbean and Pacific States signatories to the Georgetown Agreement or the Partnership Agreement (ACP) between the ACP and the European Union, officially called the Page 4 of 149
  5. 5. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General The costs incurred to ensure that agents and managers act in the best interest of the principal. For example, reward to A Business Terms Agency Costs managers as a percentage of profit. General A Business Terms Agent A business entity that negotiates, purchases, and/or sells, but does not take title to the goods. General The total demand of all potential buyers of a commodity or service. Includes all individuals and organizations that have the A Business Terms Aggregate Demand ability, willingness, and authority to purchase such products. The Agreement on Textiles and Clothing (ATC) and all restrictions thereunder terminated on January 1, 2005. The expiry of the Agreement on General ten-year transition period of ATC implementation means that trade in textile and clothing products is no longer subject to A Business Terms Textiles and Clothing quotas under a special regime outside normal WTO/GATT rules but is now governed by the general rules and disciplines (ATC) embodied in the multilateral trading system. General A Business Terms Air Waybill A nonnegotiable instrument of domestic and international air transport that functions as a bill of lading. General A Business Terms All-in-cost The percentage cost of a financing alternative, including any bank fees or placement fees. General A Business Terms Allocational Efficiency The efficiency with which a market channels capital toward its most productive uses. General Allocation-of-Income In the U.S. tax code, these rules define how income and deductions are to be allocated between domestic-source and foreign- A Business Terms Rules source income. General An amount paid or credited by sellers to the buyers on products due to one or more reasons that did not meet buyers A Business Terms Allowance specifications such as late shipment and faulty packaging. Page 5 of 149
  6. 6. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General A tariff that has two or more rates for the same product, trading to and from the same points, with the authority to use one that A Business Terms Alternative Tariff produces the lowest charge. General A Business Terms American Option An option that can be exercised anytime until expiration (contrast with European option). General A Business Terms American Shares Shares of a foreign corporation issued directly to U.S. investors through a transfer agent in accordance with SEC regulations. General A Business Terms American Terms A foreign exchange quotation that states the U.S. dollar price per foreign currency unit (contrast with European terms). General A Business Terms Amortise the gradual process of writing off the cost of an asset, or paying off a liability by means of a sinking fund, over a period of time. The Andean Community or Comunidad Andina de Naciones in Spanish (CAN) is made up of Bolivia, Colombia, Ecuador, Peru General Andean Community A Business Terms (CAN) and Venezuela. It is a series of bodies and institutions that work to bring Andean subregional integration, promote external projection, and reinforce the actions connected with the process. General A Business Terms Andean Pact A regional trade pact that includes Venezuela, Colombia, Ecuador, Peru, and Bolivia. General A level stream of equal dollar payments that lasts for a fixed time. An example of an annuity is the coupon part of a bond with A Business Terms Annuity level annual payments. General A Business Terms Annuity Factor The term used to calculate the present value of the stream of level payments for a fixed period. Page 6 of 149
  7. 7. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Laws that are enacted to prevent dumping - offering prices in the overseas market that is lower than that at which a product is A Business Terms Anti-dumping Laws sold in its home domestic market. The Appellate Body is a World Trade Organization (WTO) entity, which was established in 1995 under Article 7 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). Its purpose is to hear appeals and General A Business Terms Appellate Body (AB) reports issued by panels in disputes between WTO members. It is composed of a standing body of 7 people and has the power to uphold, modify, or reverse the legal findings and conclusions of a panel. These rulings must be accepted by the parties of the dispute. The Appellate Body has its seat in Geneva, Switzerland. General A Business Terms Appreciation An increase in a currency value relative to another currency in a floating exchange rate system. General Arab Maghreb Union A regional alliance seeking economic and political unity in Northern Africa. Members are Algeria, Libya, Mauritania, Morocco, A Business Terms (AMU) and Tunisia. General The process of purchasing and selling the identical products, such as foreign exchange, stocks, bonds and other commodities, A Business Terms Arbitrage in several markets intending to make profit from the difference in price. Arbitrage is generally seen as a "risk-less" transaction. General Arbitrage Pricing A Business Terms Theory (APT) APT is a theory used in finance to find the prices of assets and is typically used in stock pricing. General The basic document of a registered company defining its internal organisation. It is one of two fundamental documents on A Business Terms articles of association which the registration of a company is based. See memorandum of association. The Asian Development Bank (ADB) is a multilateral development financial institution owned by 67 members (48 from the General Asian Development A Business Terms Bank (ADB) region and 19 from other parts of the globe). Its goal is to improve the welfare of the people in Asia and the Pacific. ADB is headquartered in Manila, Philippines. It is one of four major development banks around the world. Page 7 of 149
  8. 8. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. A forum designed to promote economic growth, cooperation, and integration among member nations. APEC has also worked to reduce tariffs and other trade barriers across the Asia-Pacific region. Its vision is based on the "Bogor Goals" adopted in the Asia-Pacific General 1994 meeting in Bogor, Indonesia. There are 21 member economies including: Australia; Brunei Darussalam; Canada; Chile; A Business Terms Economic Peoples Republic of China; Hong Kong, China; Indonesia; Japan; Republic of Korea; Malaysia; Mexico; New Zealand; Papua Cooperation (APEC) New Guinea; Peru; The Republic of the Philippines; The Russian Federation; Singapore; Chinese Taipei; Thailand; United States of America; Viet Nam. General A Business Terms Ask Rates The rate at which a market maker is willing to sell the quoted asset. Also known as offer rates. Anything of worth that is owned. The assets of a business are money in the bank, accounts receivable, securities held in the General A Business Terms Asset name of the business, property or buildings, equipment, fixtures, merchandise for sale or being made, supplies and all things of value that the business owns. General Asset Allocation A Business Terms Policy The target weights given to various asset classes in an investment portfolio. General Sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a A Business Terms Asset turnover standard business ratio. Property that a business owns, including cash and receivables, inventory, etc. Assets are any possessions that have value in an exchange. The more formal definition is the entire property of a person, association, corporation, or estate applicable or subject to the payment of debts. What most people understand as business assets are cash and investments, accounts receivable, inventory, office equipment, plant and equipment, etc. Assets can be long-term or short-term, and the distinction General A Business Terms Assets between these two categories might be whether they last three years, five years, 10 years, or whatever; normally the accountants decide for each company and what’s important is consistency. The government also has a say in defining assets, because it has to do with tax treatment; when you buy a piece of equipment, if you call that purchase an expense then you can deduct it from taxable income. If you call it an asset you can’t deduct it, but you can list it on your financial statement among the assets. The tax code controls how businesses decide to categorize spendings into assets or expenses. General A Business Terms Assets In Place Those assets in which the firm has already invested (Compare to growth options). Page 8 of 149
  9. 9. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. Association of General An economic and geopolitical affiliation formed in 1967 that includes Singapore, Brunei Darussalam, Malaysia, Thailand, the A Business Terms Southeast Asian Philippines, Indonesia, Myanmar (Burma), Laos, Cambodia, and Vietnam. Nations (ASEAN) General Legal seizure of a property or a person before the judgment is made, in order to secure compensation if awarded. The A Business Terms Attachment prosecutor can request the court to issue an order to seize a property. General A Business Terms At-the-money Option An option with an exercise price that is equal to the current value of the underlying asset. General detailed checking of the financial records of a business by an independent qualified person (auditor) in order to verify their A Business Terms Audit correctness or to detect errors or fraud. General Australian Business An identifier for dealings with the Australian Taxation Office and for future dealings with other government departments and A Business Terms Number (ABN) agencies. General A Business Terms Autarky In models of international trade, a situation in which there is no cross-border trade. General The total amount of capital which a company, by its memorandum of association, is authorised to offer for subscription. See A Business Terms Authorised capital also, paid up capital. General A guarantee of the buyers credit provided by the guarantor, unless the buyer is of unquestioned financial standing. The aval is A Business Terms Aval an endorsement note as opposed to a guarantee agreement. General A Business Terms Avalisation Payment undertaking given by a bank in respect of a bill of exchange drawn. Page 9 of 149
  10. 10. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Average Accounting A Business Terms Return (AAR) The average project earnings after taxes and depreciation divided by the average book value of the investment during its life. General A Business Terms Award An agreement having the force of law, which sets out working conditions and wages for certain types of employment. Front end and back end describe program interfaces relative to the user. The front end, here, is the appearance of your website. It is the graphic design and HTML portion — some people call this the user interface or UI. In contrast, the portion of General B Business Terms back end (websites) the application you or your developers work with is the back-end. The back end handles the dynamic parts of the site, such as a newsletter, an administration page, a registration database, a contact page or more complicated Web applications. Your back end interfaces with your UI and makes your website work. General A customer order for materials, goods in process, or finished goods that is not currently in stock but is to be sold or delivered B Business Terms Back Order when it becomes available. General B Business Terms Backward Innovation Building a more basic version of an existing product for a lesser-developed market. General B Business Terms Bad debts Money owed to you that you cant collect General The amount of money remaining in an account. The total of your money in the bank after accounting for all transactions B Business Terms Balance (deposits and withdrawals) is called a "balance". General The International Monetary Fund’s accounting system that tracks the flow of goods, services, and capital in and out of each B Business Terms Balance of Payments country. Page 10 of 149
  11. 11. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General B Balance of Trade The difference between a country’s total imports and exports over a set period. Business Terms An important business document that shows what a business owns and owes as of the date shown. Essentially a "balance General B Business Terms Balance sheet sheet" is a list of business assets and their cost on one side and a list of liabilities and owners equity (investment in the business) on the other side with the amount for each. The liabilities include all that the business owes. General B Business Terms Balanced Economy In national finances, it is when exports are equal to imports. General A written instruction to a bank’s agent to pay a sum of money to the person specified on the draft. A safe and convenient way B Business Terms Bank draft of remitting money overseas. General Bank for International An international organization, which promotes international monetary and financial cooperation among nations by fostering the B Business Terms Settlements ((BIS)) cooperation of world central banks. General A comparison between the bank’s record of transactions and the record of the firm’s cash book. After taking into account such B Business Terms Bank reconciliation items as unpresented cheques and bank charges etc., the two records should show an identical balance. General B Business Terms Bank Release A document issued by a bank authorizing the delivery of goods. Bank-based General B Business Terms Corporate A system of corporate governance in which the supervisory board is dominated by bankers and other corporate insiders. Governance System General B Business Terms Bankers Acceptance A time draft drawn on and accepted by a commercial bank. Page 11 of 149
  12. 12. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General B Business Terms Bankers Draft A payment instrument used to make international payments. General A debtor, who has volunteered or been forced to appear before a Bankruptcy Court and has been judged insolvent, because B Business Terms Bankrupt s/he has insufficient assets to meet the demands of all creditors. General Bargain Purchase A lease provision allowing the lessee, to purchase the equipment for a price predetermined at lease inception, which is B Business Terms Option substantially lower than the expected fair market value at the date the option can be exercised. General B Business Terms Barter Trade in which merchandise is exchanged directly for others without use of money or the involvement of a 3rd party. General An international treaty concerned with restricting the movement of hazardous wastes between countries, especially from B Business Terms Basel Convention developed to underdeveloped countries. General Accept the project if the (Internal Rate of Return) IRR is greater than the discount rate; reject the project if IRR is less than the B Business Terms Basic IRR Rule discount rate. General B Business Terms Basis The simple difference between 2 nominal interest rates. General B Business Terms Basis Point Equal to 1/100 of 1 percent. General B Business Terms Basis Risk The risk of unexpected change in the relationship between futures and spot prices. Page 12 of 149
  13. 13. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General A floating-for-floating interest rate swap that pairs two floating rate instruments at different maturities (such as 6-month LIBOR B Business Terms Basis Swap versus 30-day U.S. T-bills). General Bonds that can be redeemed by the holder. The convention in most West European countries is to issue bonds in registered B Business Terms Bearer Bonds form (contrast with registered bonds). General A systematic procedure of comparing a company’s practices against the best practice and modifying actual knowledge to B Business Terms Benchmarking achieve superior performance. General B Business Terms Beneficiary A party who receives a legal benefit. A measure of an asset’s sensitivity to changes in the market portfolio (in the Capital Asset Pricing Model) or to a factor (in the General B Business Terms Beta APT). The beta of an asset j is computed as bj = rj,k (sj/sk), where k represents a market factor (such as returns to the market portfolio in the CAPM). General B Business Terms Bid Bond A type of bond which guarantees the fulfillment of an offer or bid if it is accepted. General B Business Terms Bid Rate The rate at which a market maker is willing to buy the quoted asset. General B Business Terms Bid-offer Spread The difference between the interest rate at which the bank borrows money and lends money. General Bilateral Investment A treaty between two countries to ensure that investments between the two countries receive the same treatment as domestic B Business Terms Treaty (BIT) or other international investments. Page 13 of 149
  14. 14. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Bilateral Trade A commercial agreement between two countries, often detailing what specific quantities of what specific goods can be B Business Terms Agreement exchanged. General A document that establishes the terms and conditions of a contract between a shipper and a shipping company under which B Business Terms Bill of Lading (BOL) freight is to be moved between specified points for a specified charge. General A document under seal, which formally transfers ownership of property specified in the document from the borrower to the B Business Terms Bill of sale lender, until such time as the debt has been paid in full. General B Business Terms Blank Endorsement The method whereby a bill of lading is made into a freely negotiable document of title. General B Business Terms Blanket Bond A bond that coves a group of people, articles or properties. General A long-term contract in which the supplier promises to re-supply the buyers as needed at agreed-upon prices over the B Business Terms Blanket Contracts contracting time. General B Business Terms Blanket Rate A rate that is applied broadly over different articles or entities. General B Business Terms Blockade The act of seizing commercial exchange with a particular country. Such act is common during wartime. General Cash flows generated by a foreign project that cannot be immediately repatriated to the parent firm because of capital flow B Business Terms Blocked Funds restrictions imposed by the host government. Page 14 of 149
  15. 15. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. The Bogor Goals were created by the Asia Pacific Economic Cooperation (APEC) in Bogor, Indonesia in 1994, with the General B Business Terms Bogor Goals intention of increasing economic unity among Asian Pacific nations by increasing trade. The goals are to have free trade and investment in developed nations by 2010 and in developing nations by 2020. General B Business Terms Bona fide In good faith, honestly, without fraud, collusion or participation in wrong doing. General Payment by a tenant to a landlord before the tenant takes over the premises and from which the landlord may be able to B Business Terms Bond deduct arrears of rent or the cost of rectifying damage. General Bond Equivalent B Business Terms Yield A bond quotation convention based on a 365-day year and semiannual coupons (contrast with effective annual yield). General An agreement relieving the party to whom the bond is issued of responsibility in a situation in which the party would normally be B Business Terms Bond of Indemnity liable. General B Business Terms Bonded Exchange Foreign exchange that cannot be freely converted into other currencies. General B Business Terms Bookkeeping The process of recording business transactions in the accounting records General A name, term, sign, symbol, design, or a combination of all used to uniquely identify a producer’s goods and services and B Business Terms Brand differentiate them from competitors. General B Business Terms Brand equity The added value a brand name identity brings to a product or service beyond the functional benefits provided. Page 15 of 149
  16. 16. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Brand extension B Business Terms strategy The practice of using a current brand name to enter a new or different product class. General B Brand recognition Positions customer’s relative perceptions of one brand to other competitive alternatives. Business Terms General Analysis of the level of sales at which a project would make zero profit. The term can also be used for sales of financial B Business Terms Break-even Analysis instruments. General B Business Terms Break-even point The point at which volume of sales is enough to cover all costs. General Bretton Woods An agreement made near the end of World War II to promote exchange rate stability and facilitate the international flow of B Business Terms Agreement currencies. General Bretton Woods An international conference held in 1944 at Bretton Woods, New Hampshire. The conference established the International B Business Terms Conference Monetary Fund and the World Bank. General A loan to provide short-term finance, usually to buy property or land, where the loan is to be cleared by longer-term borrowing, B Business Terms Bridging loan or the sale of assets. General B Business Terms Broker An intermediary that serves as a go-between for the buyer or seller. General B Business Terms Budget An estimate of expenses and revenue required. Page 16 of 149
  17. 17. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Goods set aside and reserved for sale specifically to balance out the market in the case of a shortage of that good. In the case B Business Terms Buffer Stock of a surplus, more off the good would be bought and set aside. General B Business Terms Bundling The practice of marketing two or more product or service items in a single package with one price. Refers to personnel burden, the sum of employer costs over and above salaries (including employer taxes, benefits, etc.). Business Plan Pro uses an assumed burden rate to calculate these extra personnel costs. The rate assumption is in the General general assumptions table, as a percentage. Business Plan Pro applies this percentage to the straight wages and salaries. For B Business Terms Burden rate example, if wages and salaries amount to $10,000 and the burden rate is 15%, then the personnel burden is $1,500, which is 15% of $10,000. The personnel burden is an operating expense, so it belongs with other expenses in the Profit and Loss table. It is also a personnel cost, so it also shows in the Personnel Plan table. General Business Activity A single form used to report business tax entitlements and obligations, including the amount of GST payable and your input tax B Business Terms Statement credits. General A brief description of an organization’s purpose with reference to its customers, products or services, markets, philosophy, and B Business Terms Business mission technology. General B Business Terms Business name The name of a business officially listed in the state or territory Register of Business Names. The written document that details a proposed or existing venture. It seeks to capture the vision, current status, expected General B Business plan needs, defined markets, and projected results of the business. A business plan “tells the entrepreneur’s story” by describing Business Terms the purpose, basis, reason and future of the venture. General An agreement designed to address situations in which one or more of the entrepreneurs wants to sell their interest in the B Business Terms Buy-sell agreement venture. Page 17 of 149
  18. 18. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General The undesirable tradeoff where sales of a new product or service decrease sales from existing products or services and C Business Terms Cannibalization minimize or detract from the total revenue contribution of the organization. General In banking and finance, when the interest on borrowed funds is tied to the market rate, an upper limit or a cap can be C Business Terms Cap negotiated and agreed upon, so that even when the market rate is higher than the stated level, no premium will be paid. General C Business Terms Capital The total owned and borrowed funds in a business. General C Business Terms Capital Account A measure of change in cross-border ownership of long-term financial assets, including financial securities and real estate. General Capital Asset Pricing C Business Terms Model (CAPM) An asset pricing model that relates the required return on an asset to its systematic risk. Long-term assets, also known as Plant and Equipment, or fixed assets. These terms are interchangeable. Assets are generally divided into short-term and long-term assets, the distinction depending on how long they last. Usually the difference between short term and long term is a matter of accounting and financial policy. Five years is probably the most frequent division point, meaning that assets that depreciate over more than five years are long-term assets. Ten years and three years are also common. Business Plan Pro sets a starting value for capital assets in either the Start-up or the Past Performance table, General C Business Terms Capital assets depending of course on the nature of the company, whether it is start-up or ongoing. In the start-up table, the capital assets are called “.” In the Past Performance table, they are labeled “Capital Assets.” As the plan unfolds into months and year, depreciation decreases the net value of capital assets, and capital expenditure increases total assets. Depreciation appears in the Profit and Loss table, because it is an expense. Capital expenditure appears in the Cash Flow table, because it isn’t an expense. Amounts typed into the Capital Expenditure row of the cash flow will increase the Capital Assets total in the Balance Sheet Table. General C Business Terms Capital Budgeting Planning and managing expenditures for long-lived assets. Page 18 of 149
  19. 19. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. Spending on capital assets (also called plant and equipment, or fixed assets, or long-term assets). Business Plan Pro tracks General capital expenditure in the Cash Flow table, because purchasing or selling assets affects cash flow, and the Balance Sheet C Business Terms Capital expenditure table, but doesn’t affect profit or loss. A positive amount typed into the Capital Expenditure row in the Cash Flow table will result in an increase in Capital Assetes in the Balance Sheet, and a negative amount will result in a decrease in Capital Assets. General C Business Terms Capital Formation The process of increasing the amount of capital goods - also called capital stock - in a country. General C Business Terms Capital Gain The positive change in the value of an asset, a negative capital gain is a capital loss. General C Business Terms Capital Goods Manufactured goods that are used for production, such as machine tools. This could also be called investment, or new investment. It is new money being invested in the business, not as loans or repayment of loans, but as money invested in ownership. This is also money at risk. It will grow in value if the business prospers, and decline in value if the business declines. This is closely related to the concept of paid-in capital, on the Balance Sheet table. Paid-in capital is the amount of money actually invested in the business as money, checks written by investors. General Paid-in capital increases only when there is new investment. It is different from retained earnings. Business Plan Pro sets the C Business Terms Capital input initial amount of Paid-in Capital as an input into either the Start-up table (for start-up companies) or the Past Performance table (for ongoing companies.) After either of those initial entries, only New Investment Received (called “capital input” in earlier versions), in the Cash Flow table, increases Paid-in Capital. An entry as New Investment Received will increase your cash, and will also increase the total amount of paid-in capital. The amounts planned should be typed into the New Investment Received row of the Cash Flow table, and they will automatically increase Paid-in Capital in the Balance Sheet table. General The line between the risk-free asset and the market portfolio that represents the mean-variance efficient set of investment C Business Terms Capital Market Line opportunities in the CAPM. General Markets for financial assets and liabilities with maturity greater than one year, i.e. long-term loanable funds, including long-term C Business Terms Capital Markets government and corporate bonds, preferred stock, and common stock. Page 19 of 149
  20. 20. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General C Business Terms Capital Rationing The case where funds are limited to a fixed dollar amount and must be allocated among the competing projects. General A list of expenses that must be met to establish a business. Even before a business is started, the owner should start keeping C Business Terms Capital requirement records. General The proportion of debt and equity and the particular forms of debt and equity chosen to finance the assets of the firm. Also C Business Terms Capital Structure known as financial structure. General An economic system that is based on private ownership; economic development is proportionate to and dependent upon the C Business Terms Capitalism accumulation and reinvestment of profits. Caribbean CARICOM consists of Antigua & Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, Haiti, Jamaica, General Community and Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent & The Grenadines, Suriname, and Trinidad & Tobago. Its purpose is to C Business Terms Common Market provide a continued economic linkage after the dissolution of the West Indies Federation for English-speaking countries in the (CARICOM) Caribbean. General C Business Terms Carrier An individual or entity that transports persons or goods for compensation under the contract of carriage. General C Business Terms Cartage The delivery of goods with short distance. General An agreement among, or an organization of, suppliers of a product to limit production in order to minimize competition and C Business Terms Cartel maximize market power. Cash normally means bills and coins, as in paying in cash. However, the term is used in a business plan to represent the bank General balance, or checking account balance. Business Plan Pro builds its financial analysis around cash and cash flow used in this C Business Terms Cash second sense, as the balance of the checking account in the bank, plus other liquid securities used to bolster the checking account. Page 20 of 149
  21. 21. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Cash Against Payment for goods where a commission house or other intermediary transfers title documents to the buyer upon payment in C Business Terms Documents (CAD) cash. An accounting system that doesnt use the standard accrual accounting. It records only cash receipts and cash spending, General C Business Terms Cash basis without assuming sales on credit (Sales made on account; shipments against invoices to be paid later) or Accounts payable (Bills to be paid as part of the normal course of business). General C Business Terms Cash book A record of cash payments and receipts, showing these under various categories. General C Business Terms Cash Cover In a letter of credit transaction, money deposited by the applicant with the issuing bank. General C Business Terms Cash discount A deduction that is given for prompt payment of a bill. General Cash generated by the firm and paid to creditors and shareholders. It can be classified as (1) cash flow from operations, (2) C Business Terms Cash Flow cash flow from changes in fixed assets, and (3) cash flow from changes in net working capital. A budget that provides an overview of cash inflows and outflows during a specified period of time. This is often called the cash General C Business Terms Cash flow budget flow, or the cash budget. Just as cash flow is one of the most critical elements of business, the cash flow projection or table is one of the most critical elements of a business plan. One of the three main financial statements (along with Income Statement and Balance Sheet), the Cash Flow shows actual General C Business Terms Cash flow statement cash inflows and outflows of the business over a specified period of time. The Cash Flow Statement reconciles the Income Statement (Profit and Loss) with the Balance Sheet. General Cash in Advance Payment for goods in which the price is paid in full before the shipment is made. This type of payment is usually only made for C Business Terms (CIA) very small shipments or when goods are made to order. Page 21 of 149
  22. 22. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General C Business Terms Cash receipts The money received by a business from customers General Sales made in cash, or with credit cards, or by check. The opposite of sales on credit (Sales made on account; shipments C Business Terms Cash sales against invoices to be paid later). General C Business Terms Cash spending Money a business spends when it pays obligations immediately instead of letting them wait for a few days first. General Cash With Order C Business Terms (CWO) Payment for goods in which the price is paid at the time the order is placed. General C Caveat emptor Let the buyer beware. The condition of sale is that the purchase is at the buyer’s risk. Business Terms Central America Free General CAFTA-DR is an extensive trade agreement between Costa Rica, the Dominican Republic, El Salvador, Guatemala, C Business Terms Trade Agreement Honduras, Nicaragua, and the United States. (CAFTA-DR) General The sole institution of a nation that has the authority to issue banknotes and set monetary and credit policies. It manages the C Business Terms Central Bank rate of exchange of the nations currency and determines the internal and external monetary stability of the currency. An entrepreneurial based model that considers the positives and negatives of three areas of the venture; founder(s), General Central driving forces opportunities, and resources. The model then evaluates these areas regarding the “fits and gaps” that indicate correlating C Business Terms model strengths or weaknesses for the venture. The CDF model also considers industry and market information in the overall analysis. General Centrally Planned C Business Terms Economy An economy in which the government, rather than free-market activity, controls the allocation of resources. Page 22 of 149
  23. 23. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Certificate of Term used in leasing. A document whereby the lessee acknowledges that the equipment to be leased has been delivered, is C Business Terms Acceptance acceptable, and has been manufactured or constructed according to specifications. Certificate of General Documents that may be asked for by the importer and/or the authorities of the importing country, as evidence of quality or C Business Terms Analysis/Certificate of conformity to specifications. Inspection General Certificate of A statement that is usually notarized in which the producer of goods certifies that the goods have been produced and are now C Business Terms Manufacture available to the buyer. General Documents that may be asked for by the authorities of the importing country, as evidence of the country of manufacture of the C Business Terms Certificate of Origin goods. General Certificate of Product C Business Terms Origin A document required by certain foreign countries for tariff purpose, certifying the country of origin of specified goods. General Change in Net C Business Terms Working Capital Difference between net working capital from one period to another. General A situation where one or more channel members believe another channel member is engaged in behavior that is preventing it C Business Terms Channel conflicts from achieving its goals. Channel conflict most often relates to pricing issues. General Channels of C The system where customers are provided access to an organization’s products or services. Business Terms distribution General C Business Terms Characteristic Line The line relating the expected return on a security to different returns on the market. Page 23 of 149
  24. 24. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General C Business Terms Chattel An item of movable personal property General C Business Terms Chill a Sale The collusion of buyers or bidders in a sale to check competition in order to obtain goods or properties below fair value. General C Business Terms Civil Law A body of law created by the legislation of a state or nation, and based upon written statutes, for its own regulation. Civil Society General C Business Terms Organizations Non-governmental and non-profit groups that work to improve society and the human condition. (CSOs) General A receipt for goods issued by a carrier that indicates that the goods were received in apparently good order and without C Business Terms Clean Bill of Lading damage. General C Business Terms Clean Collection Collection in which only the financial document is sent through the banks. General C Business Terms Clearance The completion of customs entry requirements that results in the release of goods to the importer. General C Business Terms Clearing The settlement of a transaction, often involving exchange of payments and/or documentation. Clearing House General C Business Terms Interbank Payments Financial network through which banks in the United States conduct their financial transactions. System (CHIPS ) Page 24 of 149
  25. 25. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. A way of measuring the success of an online advertising campaign. A CTR is obtained by dividing the number of users who General clicked on an ad on a Web page by the number of times the ad was delivered (impressions). For example, if your banner ad C Business Terms Click-through rate was delivered 100 times (impressions delivered) and 1 person clicked on it (clicks recorded), then the resulting CTR would be 1%. General A mutual fund in which the amount of funds under management is fixed and ownership in the funds is bought and sold in the C Business Terms Closed-end Fund market like a depository receipt. General Closed-end C Business Terms Transaction A credit transaction in which the time for repayment and amount are fixed. General C Co-branding The pairing of two manufacture’s brand names on a single product or service. Business Terms General C Business Terms Codex Codex Alimentarius Commission (a world food standards body) General C Business Terms Collar An agreement that fixes the interest rate between a lower and upper boundary, regardless of the market rate. General C Business Terms Collateral security provided by a borrower to cover the possibility that the loan will not be repaid. General The bank that acts as the agent of the seller to collect payment(s) from the buyer and then transfer the payment(s) to the C Business Terms Collecting Bank remitting bank (sellers bank). Collection days is supposed to represent the average number of days business waits, on average, between delivering an General C Business Terms Collection days invoice and receiving payment. The formula for calculating collection days is: =(Accounts_receivable_balance*360)/(Sales_on_credit*12) See Collection period, below. Page 25 of 149
  26. 26. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General C Business Terms Collection Order In a collection, the document in which the seller instructs the banks as to how the collection is to be conducted. General Collection period The average number of days that pass between delivering an invoice and receiving the money. The formula is: C Business Terms (days) =(Accounts_receivable_balance*360)/(Sales_on_credit*12) General A trademark or service mark for a cooperative, association or a collective group to indicate membership in this collective C Business Terms Collective Mark group. General C Business Terms Collectivist Society A society in which people feel more comfortable thinking and acting in groups. General An agreement (usually secret ) among mostly oligopolistic competing firms in an industry to control the market, raise the C Business Terms Collusion market price, and otherwise act like a monopoly. General An economy based on government ownership and/or control of societys resources; during the 20th century, the dominant form C Business Terms Command Economy of command economy was communism. General A bank whose primary function is to accept demand deposits (which can be withdrawn upon depositories demand), and grant C Business Terms Commercial Bank short-term and long-term loans. General A letter of credit that assures the seller that buyer will pay for the goods being sold. Such letter is usually issued by a bank upon C Business Terms Commercial Credit clients request. General Commercial General term for documents describing various aspects of a transaction, e.g. commercial invoice, transport document, C Business Terms Document insurance document, certificate of origin, certificate of inspection, etc. Page 26 of 149
  27. 27. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Method of packing a shipment in which various goods subject to differing duties are grouped together. Because of this, the C Business Terms Commingling value of each type of item is difficult to determine. In business, a commission is the compensation paid to the person or entity based on the sale of a product; commonly General calculated on a percentage basis. The most frequent commission formula is gross margin multiplied by the commissions C Business Terms Commission percentage. To handle commissions with Business Plan Pro, use the spreadsheet programming capabilities to make one row of operating expenses depend on sales, or gross margin. General An assumed percentage used to calculate commissions expense as the product of commission percent multiplied by sales, C Business Terms Commission percent gross margin, or related sales items. General Commodity Price C Business Terms Risk The risk of unexpected changes in a commodity price, such as the price of oil. General C Business Terms Commodity Swap A swap in which the (often notional) principal amount on at least one side of the swap is a commodity such as oil or gold. General C Business Terms Common Carrier An organization that transports persons or goods for a fee. General C Business Terms Common Law The body of law based on customs, usages, and court decisions rather than statutory laws. General A common market is a group of countries that have common external tariffs against non-member nations. It may also allow C Business Terms Common Market labor mobility as well as common economic policies. For example, the European Union (EU). Common Market for An organization of states that intends to promote the development of the resources of its members, COMESA forms a major General C Business Terms Eastern and Southern trading block of 20 nations: Angola, Burundi, Comoros, D.R. Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Africa (COMESA) Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia and Zimbabwe. Page 27 of 149
  28. 28. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General An association of independent states that promotes cooperation, consultation, and mutual assistance among members. C Business Terms Commonwealth However, such association has no treaty or constitution. For example, the British Commonwealth. (U.K.): A CIC is a new type of limited company in the United Kingdom, designed for social enterprises that want to use their profits and assets for the public good. CICs will be easy to set up, with all the flexibility and certainty of the company form, but General Community Interest with some special features to ensure they are working for the benefit of the community. This is achieved by a “community C Business Terms Company (CIC) interest test” and “asset lock”, which ensure that the CIC is established for community purposes and the assets and profits are dedicated to these purposes. Registration of a company as a CIC has to be approved by the Regulator who also has a continuing monitoring and enforcement role. General C Business Terms Company A business owned by a group of people called shareholders, which has its own legal identity separate from its owners. A comparative advantage exists when a nation or economic region is able to produce a product at a lower opportunity cost General Comparative C Business Terms Advantage compared to another nation or region. The rule of economics that states that each country should specialize in producing those goods that it is able to produce relatively most efficiently. General C Business Terms Compensatory Trade The sale of goods or services that is paid for by bartering other goods or services. General Competitive The strategic development where customers will choose a firm’s product or service over its competitors based on significantly C Business Terms advantage more favorable perceptions or offerings. General Assessing and analyzing the comparative strengths and weaknesses of competitors; may include their current and potential C Business Terms Competitive analysis product and service development and marketing strategies. Strategic competitive advantages and justification for entering an established market or activity that provides recognizable and General Competitive entry C Business Terms wedges known value. The four competitive entry wedges include: 1) New product or service 2) Parallel Competition 3) Franchise Entry 4) Twists Page 28 of 149
  29. 29. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General Complementary C Business Terms Imports The imports of goods or services that the importing country does not possess or produce. General Completed store C Business Terms transactions A conversion value measuring the number of purchases made on the website. General Compliant Documents presented under a letter of credit that comply with all its terms and conditions. The banks are only obliged to pay C Business Terms Documents the beneficiary if documents are totally compliant. General Interest that is earned both on the initial principal and on interest earned on the initial principal in previous periods. The interest C Business Terms Compound Interest earned in one period becomes in effect part of the principal in a following period. General C Business Terms Compound Rate A rate that has both a specific rate as well as an ad valorem rate. General C Business Terms Compound Value Value of a sum after investing it over more than one period. Also called future value. General Process of reinvesting each interest payment to earn more interest. Compounding is based on the idea that interest itself C Business Terms Compounding becomes principal and therefore also earns interest in subsequent periods. General Concentrated target C Business Terms marketing A process that occurs when a single target market segment is pursued. General C Business Terms Confirming Bank Bank that adds its payment undertaking to a letter of credit. Page 29 of 149
  30. 30. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General C Business Terms Consignee Party to whom goods are to be delivered. Delivery of merchandise from an exporter (the consignor) to an agent (the consignee) under agreement that the consignee General C Business Terms Consignment sells the merchandise of the account of the consignor, while the consignor retains title to the goods until the consignee sells them. The consignee sells merchandise for commissions and remits the net proceeds to the consignor. General A consignor is an individual entity, partnership or a company that ships its goods to another party to be taken care of. A C Business Terms Consignor consignor is usually an exporter. General C Consolidated Income The sum of income across all of the multinational corporation’s domestic and foreign subsidiaries. Business Terms A form of corporate reorganization in which two firms pool their assets and liabilities to form a new company. The term can General C Business Terms Consolidation also be used for shipping, in which a freight consolidator combines shipments of cargo that are less than truckload (LTL) in order to reduce shipping rates. A document required by some foreign countries, describing a shipment of goods and showing information such as the General C Business Terms Consular Statement consignor, consignee, and value of shipment. Certified by a consular official of the foreign country, it is used by the countrys officials to verify the value, quantity, and nature of the shipment. General C Business Terms Consulate The diplomatic building located in a foreign country that represents the commercial interests of the home country. General C Business Terms Consumer Goods Goods produced for individuals rather than for manufacturing purposes. General Consumer price index A measure of the aggregate rise or fall in prices of commonly used goods and services, published by the Commonwealth C Business Terms (CPI) Government as a basis, among other things, for deciding what overall increases should be made to wages and salaries. Page 30 of 149
  31. 31. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. General The amount the buyer pays the seller to delay the transaction of a security, especially when the future price of the security is C Business Terms Contango above the expected future spot price. The opposite is called backwardation. Contingency insurance protects the exporter in any situation in which exporter responsibility relied on the buyer to insure, but General Contingency C Business Terms Insurance sustained a loss because of inadequate coverage from that source. It will cover situations in which the FOB endorsement would have otherwise served had that been in force. General Claim whose value is directly dependent on, or is contingent on, the value of its underlying assets. For example, the debt and C Business Terms Contingent claim equity securities issued by a firm derive their value from the total value of the firm. General A liability which will only arise upon the happening of a certain event, for example, the guarantor of a loan being asked to C Business Terms Contingent liability honour the guarantee if the borrower defaults. General Continuous C Business Terms Compounding Interest compounded continuously, every instant, rather than at fixed intervals. General Continuous Quotation A trading system in which buy and sell orders are matched with market makers as the orders arrive, ensuring liquidity in C Business Terms System individual shares. General C Business Terms Contract A legally binding agreement between two or more parties. General Contract C Business Terms Manufacturing A firm allowing another firm to manufacture a pre-specified product. Page 31 of 149
  32. 32. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. Contribution can have different meanings in different context. When contribution is applied to a product or product line, it means the difference between total sales revenue and total variable costs, or, on a per-unit basis, the difference between unit selling and the unit variable cost and may be expressed in percentage terms (contribution margin) or dollar terms (contribution General C Business Terms Contribution margin per unit). Contribution is also frequently expressed as contribution margin for a whole company or across a group or product line, in which case it can be taken as gross margin less sales and marketing expenses. For example, Marketing Plan Pro produces a table named Contribution Margin that shows sales, cost of sales, gross margin, sales and marketing expenses, and contribution margin. The contribution is gross margin less sales and marketing expenses. General Controllable C Business Terms expenses Those expenses that can be controlled or restrained by the businessperson. General Controlled Foreign C Business Terms Corporation (CFC) In the U.S. tax code, a foreign corporation owned more than 50 percent either in terms of market value or voting power. Convention on the CITES (the Convention on International Trade in Endangered Species of Wild Fauna and Flora) is an international agreement General International Trade in C between governments. Its aim is to ensure that international trade in specimens of wild animals and plants does not threaten Business Terms Endangered Species their survival. (CITES) The percentage of unique website visitors who take a desired action upon visiting the website. The desired action may be General C Business Terms Conversion rate submitting a sales lead, making a purchase, viewing a key page of the site, downloading a file, or some other measurable action. General Bonds sold with a conversion feature that allows the holder to convert the bond into common stock on or prior to a conversion C Business Terms Convertible Bonds date and at a prespecified conversion price. General C Business Terms Convertible Currency A currency that can be traded for other currencies at will. General Convex Tax A tax schedule in which the effective tax rate is greater at high levels of taxable income than at low levels of taxable income. C Business Terms Schedule Such a schedule results in progressive taxation. Page 32 of 149
  33. 33. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. The Cooperation Council for the Arab States of the Gulf (GCC) was established on May 25, 1981. It joined the 6 states of the Cooperation Council General United Arab Emirates, State of Bahrain, Kingdom of Saudi Arabia, Sultanate of Oman, State of Qatar and State of Kuwait. The C Business Terms for the Arab States of frameworks focus is on acheiving a state of unity in all fields among its member states. It also stresses a furthering of relations the Gulf (GCC) and cooperation among member states and provides a platform to address security and economic development chanllenges. General The rules and regulations that all applicant countries to the European Union must meet, and to which all EU member nations C Business Terms Copenhagen Criteria must maintain. A type of property right which protects the expression of ideas such as literary or dramatic works, television productions, General C Business Terms Copyright drawings etc., from being used for commercial gain without permission of the copyright owner. Registration is not a prerequisite for protection. General Core marketing C Business Terms strategy A statement that communicates the predominant reason to buy to a specific target market. General The set of values, beliefs, relationships between individuals and functions that guide the decisions of a company to achieve its C Business Terms Corporate Culture objectives. General Corporate C Business Terms Governance The way in which major stakeholders exert control over the modern corporation. General Corporate Social The responsibilities that corporations (including MNCs) have to workers and their families, to consumers, to investors, and to C Business Terms Responsibility (CSR) the natural environment. Page 33 of 149
  34. 34. Encyclopedia General Business Terms (1296 Terms) Powered by www.drawpack.com; All rights reserved. Corporations are either the standard C corporation or the small business S corporation. The C corporation is the classic legal entity of the vast majority of successful companies in the United States. Most lawyers would agree that the C corporation is the structure that provides the best shielding from personal liability for owners, and provides the best non-tax benefits to owers. This is a separate legal entity, different from its owners, which pays its own taxes. Most lawyers would also probably agree that for a company that has ambitions of raising major investment capital and eventually going public, the C corporation is the standard form of legal entity. The S corporation is used for family companies and smaller ownership groups. The clearest distinction from C is that the S corporation’s profits or losses go straight through to the S corporation’s owners, without being General C Business Terms Corporation taxed separately first. In practical terms, this means that the owners of the corporation can take their profits home without first paying the corporation’s separate tax on profits, so those profits are taxed once for the S owner, and twice for the C owner. In practical terms the C corporation doesn’t send its profits home to its owners as much as the S corporation does, because it usually has different goals and objectives. It often wants to grow and go public, or it already is public. In most states an S corporation is owned by a limited number (25 is a common maximum) of private owners, and corporations can’t hold stock in S corporations, just invidivuals. Corporations can switch from C to S and back again, but not often. The IRS has strict rules for when and how those switches are made. You’ll almost always want to have your CPA and in some cases your attorney guide you through the legal requirements for switching. General A measure of the covariability of two assets that is scaled for the standard deviations of the assets (rAB = sAB / sAsB such that C Business Terms Correlation -1 < rAB < +1). General C Business Terms Correspondent Bank A bank that, in its own country, handles the business of a foreign bank. General The principal where an entrepreneurial venture may find that it has significantly changed it’s focus from the initial concept of the C Business Terms Corridor Principal venture as it has continually responded and adapted to it’s market and the desire to optimize profitability potential. General C Business Terms Co-signers People whom together share responsibility on behalf of a business by jointly signing documents or cheques. Page 34 of 149

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