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Definition of following terms Essay

Time value of money

This refers to the principle that a dollar on hand today has more value than a dollar received sometime in the future. Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc.. Efficient market

Refers to the type of market where everyone receives the same time of information and prices are reflected based on this information. Business Dictionary.com. (n.d.). Retrieved from http://www.businessdictionary.com/definition/efficient-market.html Primary versus secondary market

Primary market refers to the securities a company sells for the first time for the purpose of raising money. Securities traded after initial investment are done through the secondary market. In the primary market, the issuing firm receives the money; in the secondary market if the shareholder of the firm decides to sell he receives the money. Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc.. Risk-return tradeoff

This principle is based on the risk that investors are willing to take for a promise of higher returns on investments. Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc..

Agency (principal and agent problems)

Refers to the problem companies face in motivating their managers who act as agents in pursuing the interests of the owners (shareholders). Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). : Pearson Education, Inc.. Market information and security prices and information asymmetry Security prices change as information is provided to all investors. In contrast in information Asymmetry one party may benefit from having more sources of information and therefore making better decisions. What is Information Asymmetry. (2014). Retrieved from http://www.investorwords.com/2461/information_asymmetry.html Keown, A. J., Martin, J. D., & Titman, S. (2014). Financial Management: Principles and Applications (12th ed.). :

Pearson Education, Inc.. Agile and lean principles

The lean principle in Finance refers to the production practice that companies use in which they target to minimize waste and use the the least amount of resources to meet the customers’ needs. Organizations that use agile type of processes allow to work on smaller projects to revamp production, maximize collaboration and allow for more flexible schedules. What is Project Management. (2014). Retrieved from http://www.villanovau.com/resources/project-management/what-is-project-management/#.VFKo2vldW

So Return on investment

It’s a form of investment measurement that shows how efficiently a company is using its resources. This ratio is usually expressed as a percentage. http://www.businessdictionary.com/definition/return-on-investment-ROI.html

Cash flow and a source of value

This is the money a company has after it has paid its bills and after it has used the money necessary to operate the business. The value of a company’s investment lies in the amount of cash flow available to spend. The Free Dictionary. (2009). Retrieved from http://financial-dictionary.thefreedictionary.com/cash+flow

Project management

This refers to the processes that involves all aspects of a project, ensuring that it is done well, on time and within budget. Processes in Project management include initiating, planning, executing, monitoring, controlling, and closing. What is Project Management. (2014). Retrieved from http://www.villanovau.com/resources/project-management/what-is-project-management/#.VFKo2vldW

So Outsourcing and offshoring

Outsourcing happens when a company contracts the services of a third party to do the work for the purpose to increase efficiency and lower costs. As opposed to offshoring this does not have to happen out of the country. Offshoring happens when a company moves abroad to reduce the costs of running its operations. What is the Difference between Outsourcing and Offshoring. (2003-2014). Retrieved from http://www.wisegeek.com/what-is-the-difference-between-outsourcing-and-offshoring.htm

Inventory turnover

Inventory turnover is a form of measurement of how frequently a company sells and replenishes its inventory. The Free Dictionary. (2009). Retrieved from http://financial-dictionary.thefreedictionary.com/ Inventory+Turnover

Just-in-time inventory (JIT)

JIT inventory system maximizes the profit by just keeping enough inventory as needed and making more frequent orders, saving space and the money associated with keeping up with large inventories. Wise Geek. (2013-2014). Retrieved from http://www.wisegeek.org/what-is-a-just-in-time-inventory.htm Vendor managed inventory (VMI)

It is the type of inventory model where the manufacturer is responsible for keeping up with the levels of the company’s inventory. Vendor Managed Inventory. (2014). Retrieved from http://www.vendormanagedinventory.com/definition.php


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