Term
| what complicates the cash flow model- 3 |
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Definition
buy on credit
sell on credit
have expenses other than just invntory |
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Term
| what 2 things help make sure that cash covers expense |
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Definition
increase gross margin
decrease expenses |
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Term
| ways to improve cash flow-3 |
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Definition
decrease cash investments
decrease chas outflow
increase cash inflow |
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Term
| what ways can you control inventory to help wiht cash |
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Definition
control size
carry proper invenotry (quality) |
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Term
| what is the 80/20 rule -2 ways to interpret |
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Definition
80% of problems come from 20% of inventory
20% of invenotry makes up 80% of sales |
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Term
Class A= -% of total sales/-% of inventory
Class B= -% of total sales/-% invt
Class C= -% of total sales/ -% of invt |
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Definition
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Term
what is shrinkage
why does it affect cash inflow |
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Definition
loss of inventory to theft or breakage
have to use cash to buy it, but get no cahs income from it |
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Term
| to improve gross margin you can-4 |
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Definition
emphasize high-margin products
3rd party contracts
increase price
decrease cost |
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Term
| to help with cash flow what do you do with idle cash |
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Definition
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Term
what investment is risk
which is not |
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Definition
stock piurchase
passbook saving account |
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Term
| what is a liquid investment |
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Definition
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Term
| to get a higher return= high/lower risk |
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Definition
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Term
| if you are investing cahs that is needed later in the year- what kind of investment do you make? |
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Definition
| liquid- bc you'll need that cahs quickly again |
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Term
| how does crediting sales hinder cash flow-3 |
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Definition
a credit= lots of investment of cash
slow cash inflo
outstanding debts become uncollectible |
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Term
what is opportunity cost
what is it equal to |
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Definition
when cash is tied up in acct recievable/ time btwn sale and payment
the cost of interest of an investment during that time |
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Term
| how can you minimize opportunity cost (investment of cash in acct recievable)3- |
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Definition
-screen credit applicants
-sned out bill promtply
-add a charge to overrdue bills |
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Term
| do you want to speed up or slow down account payable |
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Definition
| slow down (reduce chas outflow) |
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