Cash Conversion Cycle - correct answer length of time, in days, that is takes for an organization to convert resource inputs (raw materials) into cash flow (revenues) - CCC = DIO+DSO+DPO
DIO(Days inventory outstanding)
DSO(Days sales outstanding)
DPO(Days Pay...
SCM 4380 Exam 2
Cash Conversion Cycle - correct answer length of time, in days, that is takes for an
organization to convert resource inputs (raw materials) into cash flow (revenues) - CCC = DIO+DSO+DPO
DIO(Days inventory outstanding)
DSO(Days sales outstanding)
DPO(Days Payable outstanding)
Capacity Utilization - correct answer proportion of the production capacity that is
utilized
- Total Units Produced / Total Units of theoretical capacity
- Minimum theoretical capacity begins at 21,000 boxes/month
- You can purchase additional capacity
Allo-centric Strategy - correct answer - Consideration of the complex interactions
within the business environment realizing that your actions change the business environment
Bertrand Pricing Principle - correct answer Principle: The easier it is for other
companies to imitate your strategy, the harder it is for you to make money
Substitutors - correct answer when making your strategy decision, try to predict
o What other companies will be doing
o How other companies will react to you
o How well you are positioned to counter their attacks
Customers - correct answer between each quarter
o Determine what products are selling at what prices in each DC
o Determining the price points that will result in your desired sales rate (regression)
o Determine if there are regions where marketing is more effective
, o Determine if there are products your customers seem to prefer and increase the proportion of these
products in your mix
Suppliers - correct answer when creating your recipes, consider your predictions of
the prices of raw materials that will affect your profit margins
- Compare to the growth of the market (market growth rate)
Gross profit margin - correct answer gross margin as a % of sales
- Gross profit margin = gross margin / revenues
- Represents the % of revenue that is available after the direct costs of production are deducted
- Gross profit margin will be greater than Net Profit Margin
Profit Variance - correct answer Variance analysis will help your company
determine how to better manage profits in the future
Statement of Cash Flows - correct answer Used primarily by investors and potential
creditors to gauge the financial health of a company
- Typically, investors & lenders want to see more cash being brought in by operating activities than by
selling assets or borrowing money
Current Assets - correct answer quickly converted to cash
- Cash
- Inventory (finished goods & raw material)
- Accounts receivable (money customers owe you
Long Term Assets - correct answer difficult to convert to cash
- Land (not depreciable)
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