© EVERLY 2025 ALL RIGHTS RESERVED.
IDIS 240 Final Exam TAMU Study Guide.
MRO - Answer✔maintenance, repair, and operations
Selling price = - Answer✔List Price - Trade Discounts
Net Price = - Answer✔selling price - allowable discounts (cash discounts)
net sale - Answer✔Actual money received after discounts and adjustments
Cost of Goods Sold (COGS) = - Answer✔Cost of Merchandise + Freight of Manufacturer
FOB Shipping Point - Answer✔Distributor/ Buyer pays for shipping and owns the product in
transit
Trade Discounts - Answer✔Specified in term of sale. Offered by manufacturer due to
fluctuations in market conditions-- ex: raw materials cost fluctuations.
FOB Destination - Answer✔Manufacturer pays for shipping and owns the product in transit
Cash Discounts - Answer✔Offered by manufacturer to encourage early payments
Trade Pricing - Answer✔Negotiating the actual price that will be paid as opposed to "list price-
trade discounts"
Special Orders - Answer✔products with some modification in design, finish, materials, or
packing
Minimum Order - Answer✔Manufacturer specifies the minimum allowable order
Freight Allowed - Answer✔Amount that must be purchased to have the manufacturer pay for the
cost of freight
Why are adjustments made? - Answer✔substitutions, different quantities/ specifications,
damaged or returned goods
Cash Flow - Answer✔Cash in Bank -> Purchased Inventory -> Sold inventory -> Accounts
receivable -> Cash in Bank· Lesser the cash flow cycle, lesser cash is required to finance the
business.
What is the rule of thumb for cash discounts? - Answer✔If possible, always take them and never
give them
Gross margin = - Answer✔selling price - COGS - Adjustments
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, © EVERLY 2025 ALL RIGHTS RESERVED.
Markup - Answer✔The money that the distributor adds to the cost of goods sold
Percent Gross Margin = - Answer✔((Selling Price- COGS)/ Selling Price) * 100%
Percent Markup - Answer✔((Selling Price - COGS)/COGS) * 100%
Operating Expense - Answer✔All costs necessary to provide services
Selling, General, and Administrative Expenses (SG&A) - Answer✔Salaries, Payroll Costs,
Travel, Entertainment cost, etc.
EBITDA - Answer✔Earnings before Interest, Taxes, Depreciation, and Amortization
EBITDA = - Answer✔Margin - OE - SG&A
What creates the most EBITDA improvement? - Answer✔Raising prices
What creates the least EBITDA improvement? - Answer✔Growing
EBIT = - Answer✔EBITDA - D&A
NPBT stands for - Answer✔Net Profit before Tax
NPBT = - Answer✔EBIT - Interest
NPAT = - Answer✔NPBT - Taxes
Describe Interest Expenses: - Answer✔Cost Paid to Borrow Money- NOT a part of Operating
Expenses
"I" stands for.... - Answer✔Interest Expenses
Describe Accounts Payable: - Answer✔- Money that the distributors owe the manufacturers for
the products purchased
- Usually it's an interest free debt
- Loses cash discounts, damages credit ratings, looses favor with other companies
Describe the cash flow cycle: - Answer✔Cash in bank -> Purchase Inventory -> Sold Inventory -
> Accounts Receivable -> Cash in Bank
Describe returns: - Answer✔Terms should include information on how, when, and where items
may be returned.
Describe Claims: - Answer✔- Terms of sale should indicate the time limit, address of contact to
claim for billing or shipping errors.
- Damages must be reported clearly specifying the problem before signing the shipment
Describe Margin: - Answer✔The difference between what distributor pays for the product and
what he spends.
2|Page
IDIS 240 Final Exam TAMU Study Guide.
MRO - Answer✔maintenance, repair, and operations
Selling price = - Answer✔List Price - Trade Discounts
Net Price = - Answer✔selling price - allowable discounts (cash discounts)
net sale - Answer✔Actual money received after discounts and adjustments
Cost of Goods Sold (COGS) = - Answer✔Cost of Merchandise + Freight of Manufacturer
FOB Shipping Point - Answer✔Distributor/ Buyer pays for shipping and owns the product in
transit
Trade Discounts - Answer✔Specified in term of sale. Offered by manufacturer due to
fluctuations in market conditions-- ex: raw materials cost fluctuations.
FOB Destination - Answer✔Manufacturer pays for shipping and owns the product in transit
Cash Discounts - Answer✔Offered by manufacturer to encourage early payments
Trade Pricing - Answer✔Negotiating the actual price that will be paid as opposed to "list price-
trade discounts"
Special Orders - Answer✔products with some modification in design, finish, materials, or
packing
Minimum Order - Answer✔Manufacturer specifies the minimum allowable order
Freight Allowed - Answer✔Amount that must be purchased to have the manufacturer pay for the
cost of freight
Why are adjustments made? - Answer✔substitutions, different quantities/ specifications,
damaged or returned goods
Cash Flow - Answer✔Cash in Bank -> Purchased Inventory -> Sold inventory -> Accounts
receivable -> Cash in Bank· Lesser the cash flow cycle, lesser cash is required to finance the
business.
What is the rule of thumb for cash discounts? - Answer✔If possible, always take them and never
give them
Gross margin = - Answer✔selling price - COGS - Adjustments
1|Page
, © EVERLY 2025 ALL RIGHTS RESERVED.
Markup - Answer✔The money that the distributor adds to the cost of goods sold
Percent Gross Margin = - Answer✔((Selling Price- COGS)/ Selling Price) * 100%
Percent Markup - Answer✔((Selling Price - COGS)/COGS) * 100%
Operating Expense - Answer✔All costs necessary to provide services
Selling, General, and Administrative Expenses (SG&A) - Answer✔Salaries, Payroll Costs,
Travel, Entertainment cost, etc.
EBITDA - Answer✔Earnings before Interest, Taxes, Depreciation, and Amortization
EBITDA = - Answer✔Margin - OE - SG&A
What creates the most EBITDA improvement? - Answer✔Raising prices
What creates the least EBITDA improvement? - Answer✔Growing
EBIT = - Answer✔EBITDA - D&A
NPBT stands for - Answer✔Net Profit before Tax
NPBT = - Answer✔EBIT - Interest
NPAT = - Answer✔NPBT - Taxes
Describe Interest Expenses: - Answer✔Cost Paid to Borrow Money- NOT a part of Operating
Expenses
"I" stands for.... - Answer✔Interest Expenses
Describe Accounts Payable: - Answer✔- Money that the distributors owe the manufacturers for
the products purchased
- Usually it's an interest free debt
- Loses cash discounts, damages credit ratings, looses favor with other companies
Describe the cash flow cycle: - Answer✔Cash in bank -> Purchase Inventory -> Sold Inventory -
> Accounts Receivable -> Cash in Bank
Describe returns: - Answer✔Terms should include information on how, when, and where items
may be returned.
Describe Claims: - Answer✔- Terms of sale should indicate the time limit, address of contact to
claim for billing or shipping errors.
- Damages must be reported clearly specifying the problem before signing the shipment
Describe Margin: - Answer✔The difference between what distributor pays for the product and
what he spends.
2|Page
