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EC140 Final review

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Justin Smith

FInance leverage : operating and financial leverage operating levergae the idea of the comany that could : invest in new machinery t hat would give them hiher fixed costs in the beging but would give them lower va riable costs later. that gives that company more operating leverage because they have more operating fixed cost before they can breakeven. but after they breake ven they make alot of profit because they have higer contribution margin. financial leverage : debt : what are some of the differences between choosing to finance which debt vs choosing to finace with equity. thoes choices effect that leverage. how does that impact the risk . will be given ratios for cash build abd and cash burn ... not the formulas.. would be good to memorize. calculating toal net cash flow and breaking it down t o monthky or weekly basus and how long you can sustain that growth before you ru n out of cash. ratios: liquidity: leverage debt to equity: profitabilt and effiecieny calculate and eqn will be given but need to know where to pull the number from the question .. and also how to interpret them cash concversion cycle... need to understane and where you use them ... so what do they tell you about the organization liknkes satrting by four steps ,., if comoines make changes to these varibes then is it a good change . The 4 steps We need to look : incremental change in contribution and thne we llo k at incremental change in fixed cost .. does that decision ake sense quantitati vely and then we look at things from qualitative perspective . u need to look at quantintaly does not efect qulaity .. you ned to make sure tha t trade off it worth it .. sacrificing quality for quantity in short term profitabilty. some kind of question relating ratios to industry avergaes and interprating resu lts from there. CUrrent ratio : if the retio is greater than 2 : means you can pay your debt twice as fast ... m eans you are in a very good position in terms of risks cause you are able to pay back the money that you might have loaned. but we dont want this ratio to be above four there is a reason for that : risk v s return: from a return perspective that this means that assessts are just sitti ng there just waiting there as there could be more return made from them using. So interms of comparison we need match the results with rule of thumb.are there other ratios that we can compare it to so that it makes more sense for that we c an compare current ratio to quick ratio : the diffence is that there is no inven tories in quick ratio. Since it takes longer for inventories to If the quick ratio is stronger than current ratio than this will trigger to look at you inventory levels. and might need to look at how much inventory the coman y is holding on to . Negotiating Negotiating skills : one minute negotiatior to guess and other getting rady to negotitate using the easy process: so making sure that the acron ym is understood !!! *************** negotiating strategiy: the 2x2 matrix.: accessing you tendencies with different styles. avoidance accomadation competitive collaboration: 2 categories : sages and gamers compromise : meeting the bottom line : no one wins : its just a result that is n ot so satisfying : when will it we undertand these : Interaction styles : how that realted to negtittion styles L how the styles inte rect with the strategies: DISC material : understand it: depending on your inter action style than you will have some tendency of using one of the styles of nego tiation strategies. 5 negotiation strategies and when to use them : getting to know when using thoes strategies will be most effective. pricipled vs positional bargaining: 1) beaing collabrative , understanding , knowing what are the interests of the e ach side and trying to work together to try and come up with something of a crea tive solution, 2) positional bargaining : is where you have hold your ground and stick it out a nd try to go head to head with negotiation. the main idea is that the size of th e pie is limited and There are only sp much resources availble so both sides are bargaining and try t o get more of the pie . : we call this distributive bargaining. and is pretty close to positional bargaining cause there is only that much of pi e to share. w where collaborating bargaining has to do more with how we can work together to a ctually make the pie bigger. advantages of principled negotiation: 4 point ) focus on interest not comfort focuses in people . Operations and sustainability difference between service vs manufacturing : comapnies that are service based vs manufacturing : they are different in term o f the decison that they make . how on service side the process is more tangible .. not about the specific produ ct its about the experieince. involvement of the customer is very different so : manufacturing is only conside rs that the customer uses that product but from service stand point you need to make sure that the whole experience was good and are involved through the end an d that kind of effect the deciosn that they make. how does that drive the capacity of the decisicion made by manufacturing vs serv ice business moving focus from mass production and setting it to focus more on mass customiza tion : is based on changes made in our industry . based on current economic conditions. .. its more preferred to do mass customization vs mass production . sustain triple bottom line : moving away from just typical idea of profit to energy effe cient: pepole and plan : the environment : campanies gaining succeess from there green standpoint .. its not just profitability its the envirnmental corcern that they need to show. product design : stuff happening for cradle to grave product designs vs cradle t o cradle Now in cradle to grave : you are looking at ways to make waste: where c
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