Time Value of Money
In financial management, time value of money is a concept that money received today has more worth than the money received tomorrow due to its increased earning capacity. In other words, since interest and investment return could be earned today, therefore, money accumulated or invested today has more financial value than the money spent in future.
Efficient Market
When, in any market, information is available to all participants, transaction costs are low or kept to a minimum and prices of commodities respond quickly to any given information, this is known as an efficient market.
Primary versus Secondary Market
Primary market is the place from where investors purchase securities directly from the company going public through Initial Public Offering (IPO) whereas the secondary market is a place where investors buy securities from and sell the same to each other.
Risk-Return Tradeoff
In financial management, risk and return tradeoff pertains to the level of risk any commodity contains and the return on investment provided by it to investors. Normally, any commodity with higher risk profile provides greater return on investment to its investors. In comparison, those securities that are backed by lower und=certainty or volatility in the market generally rewards its investors with higher investment returns.
Agency (Principal and Agent Problems)
This concept concerns the moral hazard problem and conflict of interest between two parties when managers, as principals, hire employees (as agents) to act in a certain manner and take those decisions that are beneficial in interests of managers but are against interest being pursued by personnel. A principal and agent problem may also occur between shareholders and company’s senior management.
Market Information, Security Prices and Information Asymmetry
Market information is a variable used to buy and sell securities. Positive market information results in purchases of shares and vice versa. When markets are inefficient and imperfect, information takes a longer time to reach investors by going through a comprehensive system flow; this is known as information asymmetry.
Agile and Lean Principles
In total quality management, it pertains to a toolkit or philosophy for continuously improving the customer value and perception of services and products. This philosophy is also applied for improving the ways in which products are produced and in development of required team with a long term perspective in mind. These principles include customer value, continuous improvement through kaizen, delivery flow and speed, empowering teams, Heijunka (balanced workload), visual management and long-term vision etc.
Return on Investment
When an investor invests in any commodity, security, product or service in any given marketplace, the benefit which he derives from change or increase in prices is known as return on investment. This will be positive if prices of commodities increase but will be negative if there is a negative or unfavorable change in market prices and volatility. In performance management, return on investment is often used to gauge efficiency of investment products or commodities.
Cash Flow and a Source of Value
Cash flow is all about the movement of liquid assets with the industry or an organization which may either reflect cash inflow or outflow. Source of value, on the other hand, defines those core activities that generate the cash flow stream. Such a source may either be the sale of any product or service.
Project Management
It is activity and process to plan, organize, motivate and control resources as well as procedures for achievement of specific tasks or problem. It is an art and science to organize one-time project components instead of any ongoing activity.
Outsourcing and Off-Shoring
Outsourcing refers to a situation in which an organization buys the services of the third party for production. Off-shoring arises when the business gets the work done in any different country for leveraging cost advantage.
Inventory Turnover
This turnover reflects the ability of any business to generate sales by selling it inventories. In other words, it is about the time period within which an inventory is sold and sales are generated.
Just-in-Time Inventory (JIT)
It is a concept in inventory management where the inventories are ordered or purchased as and when demanded or required to reduce inventory handling costs. This strategy increases efficiency and reduces waste by purchasing goods or inputs as they are required in the production process.
Vender Managed Inventory (VMI)
It is a means to optimize supply-chain performance where manufactures take the responsibility to maintain suppliers’ inventory levels.
Forecasting and Demand Management
Forecasting is the utilization of historical data for determining the direction of future trends in any variable. It is a process of making future estimations/predictions based on historical data and analysis. Demand management is a method to predict (forecast), plan and manage the demand of any product or service.
