Cost benefit analysis is, as its name suggests, the exercise of evaluating an action's consequences whereby the pluses are weighed against the minuses. It is the fundamental assessment behind virtually every business decision, and stems from the simple fact that business managers do not spend money unless the resulting benefits are expected to exceed the cost.
Cost control, also known as cost management or cost containment, is a broad set of cost accounting methods and management techniques with the common goal of improving business cost-efficiency by reducing costs, or at least restricting their rate of growth. Businesses use cost control methods to monitor, evaluate, and ultimately enhance the efficiency of specific areas, such as departments, divisions, or product lines, within their operations.
In the context of financial management, the term "cost of capital" refers to the remuneration required by investors or lenders to induce them to provide funding for an ongoing business. If the firm's goal is to remain profitable and to increase value to its shareholders, any use of capital must return at least its cost of capital, and optimally, an amount greater than its cost of capital.
Manufacturing costing methods are accounting techniques that are used to help understand the value of inputs and outputs in a production process. By tracking and categorizing this information according to a rigorous accounting system, corporate management can determine with a high degree of accuracy the cost per unit of production and other key performance indicators.
Costs are an integral part of doing business. Every factor of production has a cost assocciated with it: labor, fixed assets, and capital, for example.
Countertrading refers to a category of international trade in which an exporter agrees to accept payment in the form of goods or services. There are many forms of countertrading, ranging from simple barter agreements to complex offset deals that involve the exporter agreeing to compensatory practices with respect to the buyer.
Coupons are certificates with a stated value that consumers can redeem with retailers or manufacturers when they make appropriate purchases. They are offered mainly by retailers and manufacturers as sales promotion tools to accomplish specific sales and marketing goals.
In the fields of commerce and finance, credit is essentially a "buy now, pay later" transaction. In other words, credit refers to transactions between two parties in which one, acting as creditor or lender, supplies the other (the debtor or borrower) with money, goods, services, or securities in return for the promise of future payment instead of immediate payment.
Credit approval is the process a business or an individual undergoes to become eligible for a loan or pay for goods and services over an extended period. Granting credit approval depends on the willingness of the creditor to lend money in the current economy and that same lender's assessment of the ability and willingness of the borrower to return the money or pay for the goods obtained—plus interest—in a timely fashion.
Credit unions are financial cooperatives designed exclusively for the purpose of serving their members, who are also the "owners" of the cooperative. The credit union is a nonprofit financial institution and is generally as concerned with community involvement as with its bottom line.
In the past two decades, crisis management has become one of the fastest emerging of the business sciences. The reason for this interest is that a single crisis—any unexpected, negative event that could impair an organization—could lead to a loss of life as well as injure the reputation and profitability of a business.
Also known as critical path analysis, the critical path method (CPM) is a widely used technique for analyzing and managing task sequences in large projects. Based on calculating how long it takes to complete essential steps of a process and analyzing how those steps interrelate, CPM is a visual and mathematical technique that gives managers the ability to effectively plan, schedule, and evaluate their projects.
Business is not conducted in an identical fashion from culture to culture. Consequently, business relations are enhanced when managerial, sales, and technical personnel are trained to be aware of areas likely to create communication difficulties and conflict across cultures.
Customer relations is the process by which companies promote customer satisfaction and, moreover, loyalty. At its most basic, it involves managing communications with customers, particularly customer questions and complaints, and resolving disputes amicably.
An important aspect of business efficiency is the cycle time, defined as the total time that it takes to complete a recurring task—usually one essential to the business's output. An example would be the time spent by an assembly machine to install a single electronic component on a circuit board, a task that may be repeated thousands or millions of times.
Businesses have a wide range of data security concerns. With the widespread use of electronic data, new security measures have been developed to protect data from uninvited or unwanted intrusion, intentional malice, human error, and physical damage.
A database is a collection of data (or facts) that are logically organized and can easily be searched or manipulated. The term "database" nearly always refers to such a collection in electronic form, which is stored on and can be searched by computer.
Database marketing (DBM) is the process of generating sales leads from a detailed computer database of existing or potential customers. When properly executed, DBM is a targeted and relatively inexpensive marketing technique.
Debits and credits are the basis for the system of double-entry accounting that is accepted as standard accounting practice today. The system had its beginning in the Renaissance, when an Italian mathematican and Franciscan monk, Luca Pacioli (1445?-1514?), described an accounting system whereby every financial transaction would have a debit amount and an equal and offsetting credit amount.
Debt is money that has been borrowed from another party and must be repaid at an agreed upon date. The cost of using this money, which also must be paid, is interest.
Decision making is a business process (with a decision being the result of that process) that allocates goods and values in a system (such as one's own time and assets, family or organizational wherewithal, or community and national resources). In a business context, the system is the business organization as the decision unit, with the manager or executive the decision maker.
Decision support systems (DSS) are a diverse group of interactive computer tools—primarily customizable software—designed to assist managerial decision making. They fall into a broader class known as management support systems (MSSs).
A decision tree is a diagram that a decision maker can create to help select the best of several alternative courses of action. The primary advantage of a decision tree is that it assigns exact values to the outcomes of different actions, thus minimizing the ambiguity of complicated decisions.
A default on a loan or bond issue occurs when the borrower fails to make interest or principal payments when they are due. Default risk affects the interest rate charged on a debt instrument.
The Delphi technique is an intensive and fairly specialized group problem-solving method used to harness and reconcile the knowledge and judgment of several experts. There is no single way of conducting a Delphi study; hence the concept, also known as the Delphi method, refers to a general process of having experts formulate solutions to problems through several cycles of revision based on each other's feedback.
Accrual accounting arises from the matching principle, which indicates that related revenues and costs should be recognized in the same period. If assets are acquired and totally consumed within an accounting period, the cost of the assets will be recognized as an expense of that period.
The term derivative is commonly used to describe a type of security whose market value is directly related to, or derived from, another traded security. Option, futures, and forward contracts are examples of derivatives as well as stock warrants, swap agreements and other more exotic variations.
Desktop publishing (DTP) is the process of using personal computers and peripheral devices to produce professional-quality formatted publications. For many such publications, DTP encompasses all aspects of design, layout, and formatting before the publication goes to a printer.