bar charts quickstudy business terminology

absolute advantage: Occurs when a country uses thesame level of resources to produce more goods thananother country

accounting: The recording, analysis and reporting offinancial transactions of a businessaccounts payable: Money owed by a company for goods andservices purchased on credit from vendorsaccounts receivable: Money owed by customers for goods orservices purchased on an open accountaccrued interest: Interest that has accumulated and is added to a loan adjustable rate mortgage (ARM): A mortgage in which theinterest rate is adjusted periodically based on a preselected indexadvertising: Placement of announcements and persuasive mes-sages (in time or space) communicated through media or nonmediaforms; used to inform or persuade members of a target market oraudience about a good, service, organization or ideaadvertising campaign: Series of coordinated advertising vehiclesin various media, scheduled for a certain time period, and related byverbal and/or visual themes or common objectivesadvertising strategy: An overview of the competitive frame,target market and message to be used in an advertising campaign

affiliate marketing: An on-line marketing strategy that sharesrevenue between on-line advertisers/merchants and on-line pub-lishers/salespeople; compensation is usually based on perform-ance (sales, clicks, registrations)

agents: Intermediaries who negotiate the purchase or sale of goodsfor their clients, but who do not take title to the goodsamortization: Payment of a debt that allows the borrower to reducedebt through regular payments over a certain period of time annual percentage rate (APR): An interest rate that reflects thecost of a loan as a yearly rateappreciate: To increase in value or price asset: Everything owned that has value, including tangible itemslike cash, accounts receivable, inventory, land, buildings, equipmentaudit: An examination and verification of a business’s accountingrecords and procedures by a trained accountant or CPA (certifiedpublic accountant) awareness: First stage in the process of learning about a new goodor service that the consumer has gotten information about but notyet formed an opinion on

back order: An item not currently in stock but to be soldor delivered when it becomes availablebalance of trade: The difference between a country’stotal imports and exports

balance sheet: A summary of a company’s financial condition ata specific period of time; indicates the company’s assets, liabil-ities and net worthbankruptcy: A legal process in which a company (or person)

owes more than its assets and is relieved from payment of debts bytransferring those assets to a trustee banner ad: A graphical Internet advertising tool; users click on thegraphic to be directed to another Web site

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behavioral analysis: An evaluation and control method used tomonitor sales force performance; involves evaluating the behavior ofsalespeople and sales performancebenchmark: Something that serves as the standard to which allother like items can be measured or comparedbeneficiary: A person who is designated to receive benefits, profitsor advantagesbeta: A measure of an asset’s risk in relation to the marketbill of lading: A contract between shipper and carrier detailing whatis being shipped, how it is being shipped, and terms of deliverybill of materials: Document used by a company to authorize a setof purchases to be made or to be taken from inventory to fulfill anorderblended payment: A loan payment, consisting of principal andinterest, that is the same amount every monthblog: An Internet communication that combines a diary, column anddirectory; short articles on various subjects with links to otherresources; updated oftenblue-chip stocks: Common stock of well-known companies with ahistory of growth and dividend paymentsboard of directors: Individuals elected by shareholders; responsiblefor managing the president and high-level managersbody copy: The section of a print ad that contains text and moredetailed information than the headlines and subheadsbond: A government- or corporation-issued certificate of debt guar-anteeing payment of the original investment plus interest by a certainfuture datebond mutual fund: Investment company that invests its sharehold-ers’ monies in bondsbook value: Total assets minus intangible assets and liabilities; canbe more or less than market valuebottom line: An accounting term for the net profit or lossbrand: A mark, symbol, word or combination that separates onecompany’s product from another’s brand awareness: Having knowledge that a brand exists; consid-ered first step in the sale processbrand category: Generic classification of goods or services; likegoods or services are in the same brand categorybrand extension: Addition of a new product to an already estab-lished line of products under the same brand name; new productbenefits from the older products’ established reputationbrand loyalty: Loyalty a consumer has to a specific brand over aperiod of timebranding: A method of identifying products and differentiatingthem from competing productsbreak-even point: The level of sales where revenue equals totalcosts; can also be expressed in terms of units of productbudget deficit: Point at which spending exceeds revenuesbusiness cycle: Period of time composed of a business upswing orexpansion, peak, downturn, trough and recoverybusiness plan: A document fully describing and analyzing aparticular business; provides complete, detailed information aboutshort- and long-term plans bylaws: A set of regulations used by an organization to conduct itsbusiness

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debt-to-equity ratio: Measures the amount of long-term financing provided by debt relative to equity; long-term debt divided by owner’s equity

Debt-to-Equity Ratio = Long-Term Debt / Owner’s Equitydemand-pull inflation: Increase in prices that occurs whendemand exceeds supplydemand schedule: Table or schedule indicating quantity of aproduct that would be demanded at a certain price pointdemographics: Characteristics of the human population orspecific segments of the populationdepreciate: To decrease in value or price depreciation: Decrease in the value of fixed assets because ofdeterioration of assets over a period of timedirect marketing channel: Goods and services sold directly fromthe producer to end user without involvement of an intermediary

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call feature: A feature that gives the right to the issuerto repurchase a bond before maturitycall to action: Statement normally found at the end of acommercial message that encourages the consumer to act

cannibalization: Reduction in the sales volume, sales revenue ormarket share of one product as a result of the introduction of a newproduct by the same producercapital budget: Allocated amount of funds to be used on pur-chasing assets such as machinery, building, equipment, computers,etc., that are needed for longer than one yearcapital gain: Profit from the sale of an investment; the pricereceived from the sale of an investment minus the price paid capitalism: Economic system based on private ownership ofbusinesses carrying cost: Expense of keeping inventory on handcash cow: Good or service that generates a steady and predictableincomecash flow statement: Financial statement that shows when cashflows are received and disbursed by a businesscategory killer: A destination store, normally large, that concen-trates on one category, enabling them to carry a broad assortmentand deep selection at a low pricecertificate of deposit (CD): A document written by a financialinstitution that shows a deposit with the issuer’s promise to return thedeposit plus earnings at a certain interest rate within a period of timechannel of distribution: Route a product follows to link producerto end consumerchapter 7: Part of U.S. Bankruptcy Code that deals with liquida-tions of a company’s assets chapter 11: Chapter in the U.S. Bankruptcy Code that allows abusiness, an individual or a partnership to declare bankruptcy andpostpone debt payments while the reorganization takes placecharter: Document issued to incorporate a business; detailsimportant aspects of the corporationcirculation: Number of copies distributed of a print advertisement click-through rate (CTR): Number of clicks-through per adimpression (refers to on-line ads)co-branding: Pairing of two or more brands on a single good orservicecold call: Unscheduled contact by phone or in person betweenseller and prospective customercommercial bank: Financial institution that raises funds by col-lecting deposits from businesses and consumers; makes loans tobusinesses and consumers; purchases corporate and governmentbondscommercial paper: Short-term unsecured note (2 to 270 days)issued by companies with good credit standingscommissions: Compensation for meeting specific sales objectivescommodity: Bulk goods, such as wheat or metal, that investorsbuy or sell usually via futures contractscommon stock: Type of security that gives partial ownership ina company; has a vote in electing board of directors; entitles theholder to share in company’s success through dividends and/or cap-ital appreciation communism: Economic system in which government owns andoperates all businessescomparative advertising: Persuading an audience to purchasea specific product by showing a brand’s superiority in comparisonwith competing brands

competitive advantage: Advantage gained that makes a productmore desirable than the competition; persuading customers to buy itinstead; can include lower prices and superiority of goods or servicesconglomerate: A company engaged in two or more unrelatedindustriesconglomerate merger: When two companies in unrelatedindustries join together consumer: Person who uses a product but does not necessarilybuy itconsumer markets: Individuals or households that purchasegoods or services for consumption or useconsumer price index (CPI): Monthly government statisticalmeasure that shows the trend of prices of goods and services pur-chased by consumers; measures inflationconsumer product: Product intended for and purchased by house-holds for their usecontribution margin: Difference between variable revenue andvariable costconventional mortgage: Mortgage not insured or guaranteed bythe federal governmentcorporation: State-chartered entity that pays taxes and is legallydistinct from its ownerscost of goods sold (COGS): Cost of materials used in producinga product or servicecost per click (CPC): Cost that advertisers pay each time a userclicks an ad or linkcreditors: Financial institutions (or individuals) that provide loanscritical path: Sequence of events in a project listed in orderaccording to completion timecurrent assets: Represents cash, accounts receivable, inventory,prepaid expenses and other assets that can be converted to cashwithin one yearcurrent liabilities: Operating loans, accounts payable andaccrued charges (including outstanding checks, wages, long-termdebt payments and taxes) due within a yearcurrent ratio: Indication of a company’s ability to meet short-termdebt obligations; the greater the ratio, the more liquid the company;current assets divided by current liabilities

Current Ratio = Current Assets/Current Liabilitiescustomer: Person who buys a product but doesn’t necessarily use itcustomer profile: Characteristics of the typical customer (basedon demographics)customer relationship management (CRM): Integrated infor-mation system designed to build customer loyalty by having cus-tomer information in a central databasecyclical unemployment: Unemployment due to a recession; hap-pens when the demand for labor declines

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Gantt chart: Bar graph that measures how long each taskin production process will take

generic generic brand: Product named by its generic classgoodwill: Amount representing the excess paid for a company, itsshares, or other assets over and above its net asset valuegoing public: Company’s initial stock issue to the public [also see IPO]gross domestic product (GDP): Total value of all goods andservices produced in a country during a given period of timegross income: Income before expensesgross margin: Price of goods and services minus manufacturing cost gross national product (GNP): Total value of goods and servicesproduced by U.S. nationals in the U.S. and abroad in a given periodof timegross profit: Net sales minus cost of goods and services soldgross sales: Total value of sales prior to deducting returns, allowancesor discounts

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discount rate: Interest rate attached to loans issued by the FederalReserve to commercial banksdisinflation: Falling inflation rate (prices are still rising)disposable income: Income left after expenses

distributor: Company or individual distributing a manufactur-er’s goods to retailersdividend: Portion of company’s profit paid to common and pre-ferred shareholders

dividend policy: Decision by which a company determines howmuch money it will pay as dividendsDow Jones Industrial Average (DJIA): Best-known U.S. indexof stocks (blue-chip); contains 30 stocks that trade on the New YorkStock Exchange (NYSE); the Dow is a barometer of how shares ofthe largest U.S. companies are performingdownsizing: Elimination of job positions within a company toimprove the bottom line

responsible for implementing the nation’s monetary policy and assist-ing the nation in attaining its economic and financial goals finance companies: Companies that make loans to individuals orbusinessesfinancial analysis: Analysis of a company’s financial statementfirst in, first out (FIFO): Inventory system in which the first goodspurchased are the first ones soldfixed annuity: Investment contract sold by insurance company thatguarantees fixed payments for life (or a specified period) to theannuitant fixed assets: Long-term, tangible assets held for business use andnot expected to convert to cash in the current or upcoming fiscalyear; items include real estate, equipment and furniturefixed costs: Operating expenses that do not change in response tothe number of products producedforecast: Predicated amount of revenue generation over a specifiedperiod of timeforeclosure: Legal process by which mortgaged property is sold topay loan of defaulting borrowerforward contract: Contract that states an exchange of currencywill occur at a specified exchange rate at a future timeforward rate: Exchange rate a bank will offer at a future timefranchise: Business arrangement under authorization to sell or dis-tribute a company’s goods or services; the owner allows others to useits trademark, trade name or copyright franchisee: Purchaser of a franchise; agrees to sell the productaccording to the franchiser’s requirementsfranchiser: Company that allows a license to individuals to operateunder the trademark and operating systems of that companyfrictional unemployment: Temporary unemployment that occurswhen people are between jobs or in seasonal employment futures: Contract to buy or sell a commodity or financial instru-ment at a specific price on a specified date

earnings per share (EPS): Company’s income for aperiod divided by the number of shares outstanding at theend of the periode-commerce: Use of electronic media (i.e., the Internet)to produce or sell goods and services

economic growth: Change in the general level of economic activityeconomies of scale: As the quantity produced increases, the costper unit decreases in the long runelectronic data interchange (EDI): Exchange of standardizeddocument forms between computers for business useembargo: Government action stopping the import or export of acertain commodity or commodities

entrepreneur: One who assumes all financial risk of the initia-tion, operation and management of a given business undertaking

environmental analysis: Gathering and examining data about acompany, including political, cultural, social, demographic, economic,legal, international and ecological factorsequal employment opportunity (EEO): Federal legislation pro-hibiting employment discrimination based on race, sex, religion orethnic backgroundequilibrium price: Price at which the quantity of a good suppliedby firms equals the quantity of the product demanded by customersequity: Difference between the fair market value of property and theamount still owed; ownership interest in a businessequity contribution: Cash that the owner(s) or investor(s) has(have) invested in the business in return for a share of ownershipesteem needs: Self-esteem, attention and recognition from othersexclusive distribution: Product distributed through one specificwholesaler or retailer in a market areaexporting: Selling products or services to other countries exposure: Any opportunity for consumer to see and/or hear anadvertising message in a certain media vehicle

federal budget deficit: When federal governmentspending exceeds the amount of taxes and other revenuereceived by the federal government

Federal Deposit Insurance Corporation (FDIC): Federalgovernment agency that insures accounts at most commercialbanks and savings banks

federal ID number: Identification number that the IRS (or a state

taxing authority) assigns to businesses for taxpaying purposes Federal Reserve System (“the Fed”): Central bank of the U.S.;

hierarchy of needs model: Human behavior theory pro-

posed by Abraham H. Maslow [see Maslow’s hierarchy of

needs]

horizontal merger: Merger of two or more companies in same

industry that produce the same type of good(s) or service(s)

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liquid: Asset that can be converted into cash quickly and with-out any price discountloan-to-value ratio (LTV): Relationship between the amountof mortgage loan and appraised value of property (expressed asa percentage)

income statement: Financial statement that reportsrevenue, cost and profits over a period of time [alsosee Profit and Loss Statement (P & L)]incorporation: Process that makes a business aseparate legal entity from its owner

incremental cost: Additional business expense incurred bytaking a certain actioninflation: Rise in general level of prices of goods and servicesover a specific period of time; can be estimated by measuringpercentage change in consumer price index (CPI)infomercial: Program-length televised commercial advertisinggoods and/or services; often includes a direct response offerinitial public offering (IPO): Company’s first sale of stock tothe public [also see Going Public]insertion order: Instructions to publisher detailing the place-ment of material for a print adinside board members: Board members who are also man-agers in the companyinside sales: Sales done via phone integrated marketing: Coordination of all promotion vehiclesto ensure consistent marketing message intensive distribution: Product is distributed through all or mostwholesalers or retailers selling that product in the marketplaceinterest: Fee charged for using an institution’s or individual’smoney or credit; expressed as percentage rate over a time periodinternational licensing agreement: Agreement that allows aforeign entity to produce another company’s product accordingto the exact standard of that companyinventory control: Process of maintaining sufficient inventoryat a level that minimizes costs

job analysis: Determining the skills and attributesneeded for a specific employment positionjoint venture: Agreement between two or morecompanies to take on same business strategy and planof action

just-in-time (JIT): Strategy that reduces inventory levels byworking closely with suppliers to coordinate delivery of materi-als just before use in manufacturing or supply process

macroeconomics: Study of economic aggregatessuch as national production and price levelmacroenvironment: Factors that influence anorganization but are outside that organization’s control

management: Administration and policymakers of companyor organization; utilizing employees and other resources in theway that best achieves company’s plans and objectivesmanagers: Employees responsible for managing work tasks ofother employees, as well as for making key business decisionsmarket: Actual and potential buyers of a good or servicemarket coverage: Degree of product distribution among outletsmarket research: Gathering, recording and analysis of data inregard to a specific customer group; used to make marketingdecisionsmarket share: Company’s total sales as proportion of the totalmarketmarketing: Operations needed to get goods or services devel-oped, priced, distributed and promoted to customersmarketing channel: Set of companies necessary to transfertitle to goods and move goods from point of production to pointof consumptionmarketing concept: Philosophy that guides the attitude ofeveryone in a company to stimulate and satisfy needs and wantsof every customermarketing environment: Environments within and outside anorganization’s control that can directly or indirectly affect theactivities of that organization (includes macroenvironment,microenvironment and internal environment)marketing intermediaries: Independent firms that help theflow of goods and services from producers to end users(includes agents, wholesalers, retailers, marketing service agen-cies and financial institutions)marketing mix: Variables (4 Ps: product, place, price, promo-tion) used to achieve sales in target marketMaslow’s hierarchy of needs: Human behavioral theory thatranks needs in five categories (physiology, safety, social, self-esteem, self-actualization); as each need is surmounted, motiva-tion sets in to achieve next categorymerchant: Marketing intermediary that takes title to and resellsmerchandisemerger: Two or more companies combining to become one;assets and liabilities of the selling firm(s) are absorbed by thepurchasing companymicroeconomics: Study of the behavior of consumers and pro-ducers operating in the individual markets of the economymission statement: Statement that communicates an organi-zation’s purpose, goals, values and functionsmoney supply: Amount of money in circulationmonopoly: Market for a good or service that only has oneseller/suppliermutual fund: Company that invests shareholders’ monies insecurities

last in, first out (LIFO): Inventory system in whichthe last item purchased is the first item usedlaw of demand: Increase in price causes decrease inquantity demanded

law of supply: Increase in price causes increase in quantitysuppliedlease: Written agreement renting assets for specified period oftime in exchange for payment, normally in the form of rentleasehold improvement: Improvement(s) made on leasedpropertyliability: Anything that a company oweslimit order: Order to buy or sell a security at a specified priceor betterlimited liability company (LLC): Type of business owner-ship combining features of a corporation and partnership; haslimited liability; avoids double taxationlimited partnership: Partnership with one general partner andany number of limited partners; they can purchase interest andbe held liable only to the extent of their interest and not risk per-sonal liabilityline of credit: Agreement with bank or financial institutionthat extends credit up to a certain amount and period of time toa specified borrower


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private company: Company whose shares are not traded onthe open marketprivate mortgage insurance (PMI): Required on almostevery conventional loan with less than 20% down payment; pro-tects lender in case borrower defaults on loanprivatization: Process of selling government-owned businessesto private companiesproducer price index (PPI): Measure of average price ofgoods bought by producersproduct: Goods or services that satisfy a needproduct differentiation: Attributes that make one productdifferent from anotherproduct life cycle: Stages a product is thought to go throughfrom creation to death: introductory, growth, maturity anddecline product line: Related goods or services offered by a singlecompanyproduct mix: Variety of goods or services offered by a companyprofit and loss statement (P&L): Summary of a company’srevenues, costs and expenses within an accounting period [alsosee Income Statement]program evaluation and review technique (PERT):Method for analyzing tasks needed to complete a project andtime estimates to complete each taskpromotion budget: Money reserved to pay for all promotionmethods over a given period of timepromotion mix: Communication techniques used to achievespecific goals; include advertising, personal selling, sales pro-motion and public relationsprospect: Company or individual in need of a particular goodor service; to seek out (through personal contact) potentialbuyers of a good or service and try to sell to themprospectus: Legal document that describes the securitiesoffered for sale, including information on investment objective,policies, fees and servicesproxy: Documents that provide shareholders with the necessaryinformation to vote in an informed manner on matters to bebrought up at a stockholders’ meeting; shareholders often givemanagement their proxy (i.e., responsibility and right to votetheir shares as outlined in the proxy statement)public company: Company whose shares are traded on theopen market, following a public offeringpublic offering: Selling of securities to the public; must beregistered with the Securities and Exchange Commission (SEC)public relations: Using publicity and other nonpaid forms ofpromotion and information to create positive public imagepublic sector: Government-owned businessespull strategy: Promotion specifically directed at the targetmarket; used to build consumer demand for productpush strategy: Promotion of product directed at the whole-saler or retailers; they in turn promote to consumer

quality: Degree to which good or service meets thespecifications of the customerquality control: Process that determines if a good orservice meets the desired level of excellence

quick ratio: Measures a company’s liquidity; used to evaluatecreditworthiness; equals quick assets (cash, marketable securi-ties, accounts receivable) divided by current liabilities

Quick Ratio = Cash + Marketable Securities + Accounts Receivable / Current Liabilities

National Association of Securities DealersAutomatic Quotation System (NASDAQ): Com-puterized system that provides price quotations forsecurities traded over-the-counter (OTC)

net present value (NPV): Used in a capital budget when thepresent value (PV) of cash flow is subtracted from the initialinvestment (I)

NPV = PV - I net profit margin: Measures how effective a company is atcost control; usually expressed as a percentage, net profitsdivided by net revenue

Net Profit Margin = Net Profits / Net Revenuenet sales: Gross sales minus returns, allowances and discountsNew York Stock Exchange (NYSE): Located on Wall Streetin New York City; also called the “Big Board”; 2,000 commonand preferred stocks traded

par value: Amount an issuer of a bond agrees to payat the bond’s maturity; also, the stated issue price ofa securitypartnership: Business ownership involving two ormore people who are fully liable for all business debts

pay-per-click (PPC): On-line advertising pricing modelwhere advertisers pay agencies based on the number of clickson a promotionpersonal selling: Sales presentation that involves face-to-face interaction with a customerphysiological needs: Basic needs for survival (food, water,air, health and sleep)points: Prepaid interest charged by a lender to lower the inter-est rate of a loan; 1 point is equal to 1% of the loan amountpolicies: Guidelines for how certain tasks should be completedpreferred stock: Capital stock that represents a partial own-ership in a company; provides a specific dividend paid prior toany dividends paid to common stockholderspremium: Gift to consumers who purchase a specific productprice index: Average level of prices relative to average levelin base time periodprime rate: Interest rate banks charge on loans to low-riskborrowers

operating expenses: Expenses incurred in normalday-to-day businessorganizational chart: Graphic showing positionswithin a company (by name and title) and the reportingrelationship

organizational structure: Way company is organized; identi-fies functions for each position within a company and reportingrelationships between those positions outside board member: Board members who are not man-agers within the companyoutside sales: Sales made by individuals visiting others inpersonoutsourcing: Purchasing service(s) from outside vendor(s) toreplace having the task(s) done within an organization’s internaloperationsowner’s equity: Total assets minus total liabilities of a com-pany or individual


NOTE: This QuickStudy ® guide is an outline of the basic principles ofBusiness Terminology. Due to its condensed nature, it cannot include every busi-ness term. We recommend you use it as a guide, but not as a replacement forexpert, in-depth advice.All rights reserved. No part of this publication may be reproduced or transmitted in any form, or by any means, electronic or mechanical, including photocopy,recording, or any information storage and retrieval system, without written permission from the publisher. ©2005BarCharts, Inc. 1007 ISBN-13: 978-142320412-1

ISBN-10: 142320412-3

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ratio analysis: Evaluation and interpretation of the rela-tionship between financial statement variablesrebate: Return of a portion of the purchase price from themanufacturer

recession: Two or more consecutive quarters of decline of the grossdomestic product (GDP)reminder advertising: Used to keep consumers thinking about a productreturn on assets (ROA): Measures a company’s profitability; netprofits divided by total assets

Return on Assets = Net Profits / Total Assetsreturn on equity (ROE): Measures the return to the stockholder asa percentage of their investment; net profit divided by owner’s equity

Return on Equity = Net Profit / Owner’s Equityreturn on investment (ROI): Monetary value created or expectedto be achieved by an investment of money

underwriting: Evaluating a loan application to deter-mine risk for lenderunlimited liability: No limit on the debt for which theowner is liable

up-sell: Selling customer a good or service of higher valueU.S. Department of Housing and Urban Development(HUD): Insures mortgage loans made by lenders and sets minimumstandards for homes

value added reseller (VAR): Company that sellsanother company’s product by adding features to it variable costs: Operating expenses that vary directlywith the number of products being produced

variable rate: Interest rate that changes periodically in relation tothe indexventure capital firm: Investment firm that invests shareholders’money in startup companies, companies that are expanding, andother risky but potentially profitable ventures vertical merger: Merger of two companies in the same industrybut at different stages in the production cycle

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strategic plan: Set of plans that describes company’s goals andobjectivesstructural unemployment: Long-term unemployment caused byworkers not having adequate skillssupply chain: Process from beginning of production until productreaches end consumersupply schedule: Table or schedule that shows the relationshipbetween the price and quantity of a good or service that produc-ers can supplysurplus: Quantity supplied by company exceeds quantity demandedby customersSWOT Analysis: Research that is broken down into four areas:strengths (internal), weaknesses (internal), opportunities (external)and threats (external)

s-corporation: Corporation whose income is taxed to itsshareholders; does not directly pay federal income tax onearningssales promotion: Marketing activities designed to encour-age sale of product or service; rebates, coupons, sampling,displays and premiums

salvage value: Value of an asset at the end of the asset’s useful life,which a company can receive from selling itsampling: Process that assesses quality by randomly selecting productsand testing them to see if they meet the standard of excellence; a pro-motional technique that offers free goods to encourage consumers topurchase new brand or productseasonal unemployment: Unemployment that occurs due tochange of season that affects demand for certain kinds of laborsecondary market: Market where securities are traded amonginvestors after they were initially offered in the primary market (e.g.,NYSE, AMEX and NASDAQ)secured bonds: Bonds issued by borrowers backed by collateralselective distribution: Product is distributed through a limitednumber of wholesalers or retailers in a market areaself-actualization: When an individual has reached his/her fullpotential as a human beingshortage: Quantity supplied by company is less than quantitydemanded by customerssocial need: Need to be accepted in a groupsocial responsibility: Awareness of how business decisions canaffect societysocialism: Economic system in which government owns and operatesmain industries, but individuals own and operate less crucial industriessole proprietorship: Unincorporated business owned and operatedby one individual span control: Number of people managed by a manager or supervisorsport exchange rate: Exchange rate quoted for immediate trans-actionsstakeholders: Individuals that have an interest in a business,including customers, owners, creditors, employees and suppliers stock: Certificate representing share of ownership in companystockholders: Investors who are partial owners of a companybecause they purchased stockstrategic business unit (SBU): Division or product line withinparent company but with separate goals and objectives

target market: Selected group of consumers (or poten-tial consumers) at which to focus marketing efforts to sella particular good or servicetelemarketing: Using the telephone for promoting andselling goods and services

times interest earned ratio (TIER): Measures the ability of acompany to cover its interest payments; earnings before interest andtaxes (EBIT) divided by annual interest expense

Times Interest Earned =Earnings Before Interest and Taxes (EBIT) / Annual Interest Expensetotal quality management (TQM): Philosophy based on idea thatsuccessful companies continuously improve the quality of theirproducts; quality is defined by the customer trade deficit: Amount of imports exceeds amount of exportsTreasury bills (T-bills): Short-term debt security issued by the U.S.Treasury Department; has maturity of one year or less and low riskTreasury notes (T-notes): Debt obligations of the U.S. govern-ment; have maturities of 1 to 10 yearstwo-level channel: Two marketing intermediaries betweenproducer and customer

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