Definitions Midterm

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Mechanical & Industrial Engineering
Michael Carter

capital expenditure: planning for equipment necessary to produce liabilities = debt [current or long term] commodity: a good, buyable consolidated statements of operations = income statement consolidated: added up[sum of all areas] capital stock - equity: ownership preferred shares - liquidity: how easy it is to sell common shares - public stock securities: investments Leverage: allows increase in return from borrowing OTHER peoples stock advertising: decomodifying, breaking away from commodity mould ie: borrow money @ 5% get return of 28% liquid investment = savings account market value: what someone is willing to pay for it [the secondary share BONDS market between buyers] Bond: loan w/ fixed repayment schedule -responds to expectations of company to invest -secondary market par value: face value on bond (discount or premium sale afterwards) maturity date: when a bond can be cashed in illiquid stock - fluxuations in stock price in big gaps -smaller companies [may not trade] yield to maturity: interest rate establishes equivalence goodwill: coupon rate: interest rate venture capitalist : early investor coupon date: incremental payment period Financial Statements current yield: crrent market interest rate Balance sheet: position at the end of fiscal period business Model Structure assets: [fixed house, current ie cash], liabilities Monte Carlo Simulation Income Statement = how much profit the company make during period or lack working capital: cost concepts life cycle: product from conception to death Assets [current or fixed ]= liabilities + owners equity shares [basic: diluted: ] life cycle costs: sum total of all costs druing lifecycle life cycle costing: designing around known costs [later change higher cost, 70-90% cost set during gross margin : how much makes after cost of production RATIOS design] phases price earnings ratio: market value / net earnings per share working capital [current ratio] : current assets / current liabilities [ratio] assessment>conceptual>detailed design> production or consturction>operational use>decline and retirement inventory turnover ratio = sales / average inventory balance reflect financial stability cost types: direct(variable) depend on activity level (labour, raw material) Overhead (fixed) machinery debt ratio: total debt / total assets [percent] debt to equity ratio: total liabilities/ total equity total cost = direct + overhead
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