Definitions

• 1) Balance sheet (BS) = a condensed statement that

shows the financial position of a company on a
specified date (usually the last day of an accounting
period). However, a BS can be completed at any
moment, not necessarily at the end of the financial
year. The balance sheet is divided into two main
sections: the asset sections, and the liability &
equity section.
• The balance sheet adheres to the following formula:
• Assets = Liabilities + Shareholders' Equity
 Definitions
• The balance sheet gets its name from the fact that the
two sides of the equation above – assets on the one
side and liabilities plus shareholders' equity on the
other – must balance out. This is intuitive: a company
has to pay for all the things it owns (assets) by either
borrowing money (taking on liabilities) or taking it from
investors (issuing shareholders' equity). 

For more information see the following video played in

class:
• https://www.youtube.com/watch?v=NkbCHQKxXXY
Definitions
 Definitions
• Example of sentence in which the word ‘balance sheet’ is used:
• The accountant for the business is preparing the taxes for the
year. He lists all assets and liabilities on the balance sheet.

• 2) Fixed asset = an asset that is not consumed or sold during the

normal course of business, such as land, buildings, equipment,
machinery, vehicles.
• Example:
• Sometimes having your business run with a fixed asset will make
you more money because there are little production costs.
 Definitions
• 3) Liabilities are the money that a company owes to
outside parties, from bills it has to pay to suppliers
to interest on bonds it has issued to creditors to rent,
utilities and salaries. Current liabilities are those
that are due within one year and are listed in order
of their due date. Long-term liabilities are due at
any point after one year.
• Example:
The company had assets of $138 million and
liabilities of $120.5 million.
 Definitions
• 4) Shareholders' equity is the money attributable to
a business' owners, meaning its shareholders. It is
also known as "net assets," since it is equivalent to
the total assets of a company minus its liabilities, that
is, the debt it owes to non-shareholders.
• Example:
If you want to find a good company to invest in you
should first try and find out what the shareholders’
equity is.
 Definitions
• 5) Accounts payable = Unpaid bills. Accounts that are owed
to suppliers (trade creditors) as distinguished from accrued
interest, rent, salaries, taxes, and other such accounts.
Accounts payable are shown under current (short-term)
liabilities in the balance sheet.

• Example:
When the accounts payable balance is cleared, and all the
vendors have received their checks, delivery of products will
resume.
 Definitions
• 6) Accounts receivable = Sales made but not paid-for by the
customers (trade debtors). Accounts receivables are shown as
current (short-term) assets in a balance sheet and are, in fact,
unsecured promises by customers to pay in the future. 

• Example:
If we could find better ways to get our customers to pay
on time we could decrease the amount in accounts
receivable and increase our cash flow.
 Definitions
• 7) Audit = Accounting: Systematic examination and verification of a
firm's books of account, transaction records, other relevant
documents, and physical inspection of inventory by qualified
accountants (called auditors). See also external audit and internal
audit.

• Example:
The task of conducting the audit was necessary as the
company had been dealing with many processes that required
stringent bookkeeping.
 Definitions
•8) Consumer staples = essential products, such as food, beverages,
tobacco and household items. Consumer staples are goods that
people are unable or unwilling to cut out of their budgets regardless
of their financial situation. Consumer staples are considered to be
non-cyclical, meaning that they are always in demand, no matter
how well the economy is performing.

•Example:
While some like to invest in companies that produce luxury items,
many prefer the more predictable demand that is generated
by consumer staples, like food and clothing.
 Definitions
•9) Consumer discretionary =goods and services that are
considered non-essential by consumers, but desirable if their
available income is sufficient to purchase them. Consumer
discretionary goods include durable goods, high-end clothing,
restaurants, hotels, entertainment and leisure, and automobiles.

•Example:
You should try to keep a good consumer discretionary fund
account so that you are always prepared for anything that may
come.
 Definitions
•10) Speculative bubble = A stock market phenomenon which occurs
when the stocks in a particular sector are inflated out of proportion to
their intrinsic value in response to exaggeratedly high expectations
of resale value. 

Example:
If you are going to make some big investments you should try
to make sure that it is not before a speculative bubble.
 Definitions
•11) slump = A slump is a slang term denoting a period of poor
performance or inactivity in an economy, market or industry. In
economic terms, a slump specifically refers to a recession, signaling a
slow down of business activity.
 

Example:
The slump in the property market is making it difficult for
people to sell their homes.
 Definitions
•12) trough = A trough is the stage of the economy's business cycle that
marks the end of a period of declining business activity and the
transition to expansion. A short period of low activity, low prices.

Example:
The graph showed peaks and troughs of activity.
 Definitions
•12) trough = A trough is the stage of the economy's business cycle that
marks the end of a period of declining business activity and the
transition to expansion. A short period of low activity, low prices.

Example:
The graph showed peaks and troughs of activity.
 Definitions
• 13) Performance appraisal =The process by which a
manager or consultant (1) examines and evaluates
an employee's work behavior by comparing it with
preset standards, (2) documents the results of the
comparison, and (3) uses the results to provide
feedback to the employee to show where
improvements are needed and why.
Performance appraisals are employed to determine
who needs what training, and who will be
promoted, demoted, retained, or fired.
 Definitions
• Example:
• I was nervous at work today because today would
be my performance appraisal and I would find out
how I was doing for the company.
 Definitions
• 14) Supply chain = the network created amongst
different companies producing, handling and/or
distributing a specific product.
• Example:
• An important part of running a small business is
ensuring that you have good supply chain
management to ensure that your stock is always
full and ready for anything.
 Definitions
• 15) Supply chain disruption = an unplanned event that
adversely affects a firm’s normal operations. For
instance, in a manufacturing environment, disruptions
include events such as an unscheduled plant
shutdown, a parts shortage, and a transportation
interruption. In a retail environment, disruptions
include events such as a supplier and logistics failures.
• Remember problem-based meeting Nokia versus
Ericsson. [contamination of chips produced by Philips
→ Nokia cannot launch their phones on the market]
 Definitions
• Example: Disruption of our supply chain could have an
adverse effect on our business, financial condition and
results of operations.
• 16) Quality control = a procedure or set of procedures
intended to ensure that a manufactured product or
performed service adheres to a defined set of quality criteria
or meets the requirements of the client or customer.
• Example: After we had to recall a number of products, my
boss put me in charge of implementing new quality
control procedures at our factories.
 Definitions
• 17) Product recall = a request to return a product after
the discovery of safety issues or product defects that
might endanger the consumer or put the maker/seller at
risk of legal action.
• Remember Tylenol meeting [recall of Tylenol capsules
from the market after killing seven people in Chicago .
The FBI discovered they capsules had been laced with
potassium cyanide].
• Example
• It looks like the two-litre model has some kind of a
steering problem and we may have to authorize a total
product recall while we conduct further tests.
 Definitions
• 18) glass ceiling = an unfair system that prevents
some people, especially women, from reaching
the most senior positions in a company or
organization.
• Example
• Hillary Clinton’s candidacy is a reminder that the
ultimate glass ceiling remains intact.
 Definitions
• 19) Corporate social responsibility = a corporation's initiatives
to assess and take responsibility for the company's effects on
environmental and social wellbeing. The term generally
applies to efforts that go beyond what may be required by
regulators or environmental protection groups.
• A company's sense of responsibility towards the community
and environment (both ecological and social) in which it
operates. Companies express this citizenship (1) through their
waste and pollution reduction processes, (2) by contributing
educational and social programs, and (3) by earning adequate
returns on the employed resources.
 Definitions
• 19) Corporate social responsibility
• Customers of cosmetics company Out of Africa do more than
just purchase high-quality shea-butter skin care products; they
also help improve the quality of life for West African women
and children. A portion of Out of Africa's proceeds is donated
to organizations that provide education and medical care to
children, and the company regularly donates to women's
cooperatives that create jobs in West Africa.
• Example: Many companies adhere to a sense of corporate
social responsibility by being environmentally friendly or by
giving their employees good health and financial benefits.
 Definitions
• 20) Cause-related marketing= a partnership between a company
and a charity where the charity’s logo is used in a marketing
campaign or brand promotion. A type of marketing which involves
the cooperative efforts of a for-profit business and a non-profit
organization for mutual benefit. It differs from corporate giving in
that it is a marketing relationship not based on donation. Unlike
philanthropy, money spent in cause related marketing is
considered an expense and is expected to show a return.

Example
• The survey conducted last year identified the fact that consumers
responded extremely positively to cause-related marketing (CRM)
partnerships between companies and charities.
 Definitions
• 21) Community investment= a type of investment which
focuses on how companies manage their activities in the
community, and in so doing create a positive impact for
both the community and the business. Many companies
develop community projects in the vicinity of their sites,
to offset (compensate) negative impacts or ‘give back’ to
the community and local workforce.

Example
• Many of our employees play a role in our community
investment programme through volunteering and
fundraising.
 Definitions
• 22) Corporate philanthropy = The charitable donations of profits
and resources given by corporations to nonprofit organizations.
Corporate philanthropy generally consists of cash donations but
can also be in the form of use of their facilities or volunteer time
offered by the company's employees. Donations are generally
handled directly by the corporation or by a foundation created by
the firm.

Example
• As a leader in corporate philanthropy, the large bank has
donated millions of dollars to fund research into various
debilitating diseases.
 Definitions
• 23) Eco-efficiency = the concept of creating more
goods and services while using fewer resources,
and creating less waste and pollution.

Example
• Calculating measures of eco-efficiency alone is not
enough to ensure added corporate value. Financial
staff must also be involved in the planning of future
long-term eco-efficiency improvement.
 Definitions
• 24) Outsourcing = a practice used by different companies
to reduce costs by transferring portions of work to outside
suppliers rather than completing it internally. Apple
outsources hundreds of thousands of manufacturing jobs
to countries like Mongolia, China, Korea and Taiwan.
• Example:
• To the chagrin of many older Americans, many US based
companies are now outsourcing their production to
countries in the third world which means that it is
becoming ever difficult to buy American made products.
 Definitions
• 25) Shareholder = A shareholder is any person, company or other
institution that owns at least one share of a company’s stock.
Because shareholders are a company's owners, they reap the
benefits of the company's successes in the form of increased
stock valuation. If the company does poorly, however,
shareholders can lose money if the price of its stock declines.

• Example:
• Executives must make decisions based on not only what is best for
the company but also based on the wishes of the shareholders.
 Definitions
•26) Stakeholder = A person, group or organization that has interest
or concern in an organization.
Stakeholders can affect or be affected by the organization's
actions, objectives and policies. Some examples of key
stakeholders are creditors, directors, employees, government (and
its agencies), owners (shareholders), suppliers, unions, and the
community from which the business draws its resources.

• Example:
• Working in public relations we tend to focus our efforts to protect our client who is
an important stakeholder to our company.