Vocab 1
Define net income
the funds left over after all of the firm's expenses, including taxes, are subtracted from sales
Define cash flow
The sum of net income and noncash charges such as depreciation
Define start-up
A growing/new business that is looking for funding.
Define merger
A combination of two or more businesses to form a single firm.
Define conglomerate
A firm that typically has at least four businesses, each making unrelated products, none of which are responsible for a majority of its sales.
Define dividends
A quarterly payment made to shareholders from a companies profit
Define retained earnings
The amount of profits the company can reinvest in its operations or in a new plant and equipment.
*Whatever is left of cash flow after dividends are paid.
Define incubators
A place where potential entrepreneurs can get training in accounting, engineering, and managerial skills, along with potential financing, to give life to a business concept.
Vertical merger
When companies involved in different stages of manufacturing, marketing, or sales join together.
T/F - A conglomerate's companies all make the same product.
False
Conglomerates company make unrelated products
Define product range
The distance people are willing to travel to visit a location where the product is sold.
Define product threshold
The minimum proportion of people in a store's range needed for the store to be profitable.
Define venture capitalist
A provider of investment funds to a new or unproven business in exchange for an equity (ownership) share.
Horizontal merger
Takes place when firms that produce the same kind of product join forces.
What is the main reason for conglomerate mergers?
Diversification
Define limited and unlimited liability
Limited liability - Personal assets are protected
Unlimited liability - You and your assets are held personally responsible
Define depreciation
A noncash charge the firm takes for the general wear and tear on its capital goods
Define angel investors
To fund the start-ups of family, friends, or others whose business ideas have potential, but could not otherwise obtain enough seed money.
If 'SteelCo,' a major steel producer in the United States, merges with 'IronWorks,' another large steel producer in the same region, what type of merger would this represent?
Horizontal Merger
Give an active example of a multinational.
McDonalds
Coca-Cola
Toyota
Define one aspect of an income statement.
Ex. sales, expenses, net income, cash flow
Define franchisee
The investor who rents or leases the business model from the franchisor and then hopes to recoup his or her investment by selling the franchisor's goods or services.
Define crowdfunding
AKA crowdsourcing, is making a direct funding appeal to a crowd of possible interested investors on a social networking platform.
If a ski resort bought and merged with a specific snowboard production company, what kind of merger would this be?
Vertical Merger
Give an active example of a conglomerate
Alphabet inc.
Amazon
3M