IDIS 240 Final Exam TAMU
Commodity pricing - ✔️✔️set by the market
4 P's - ✔️✔️1. Product
2. Performance
3. Processes
4. Presence
Cosmic law of business - ✔️✔️Can be profitable with at least 2 of these:
1. Cheap
2. Good
3. Fast
Power of small numbers - ✔️✔️
Balance sheet items - ✔️✔️
OEM - ✔️✔️Original Equipment Manufacturer
3 end users - ✔️✔️mro, oem, Contractor items
Distributor profitability items - ✔️✔️1. Buy Lower
2. Sell Higher
3. Collect Sooner
4. Pay Later
5. Turn Inventory More Often
6. Increasing Operating Efficiencies
Cash Discounts - ✔️✔️Offered by manufacturer to encourage early payments
Trade Pricing - ✔️✔️Negotiating the actual price that will be paid as opposed to "list
price- trade discounts"
Special Orders - ✔️✔️products with some modification in design, finish, materials, or
packing
Minimum Order - ✔️✔️Manufacturer specifies the minimum allowable order
, Freight Allowed - ✔️✔️Amount that must be purchased to have the manufacturer pay
for the cost of freight
Why are adjustments made? - ✔️✔️substitutions, different quantities/ specifications,
damaged or returned goods
Cash Flow - ✔️✔️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? - ✔️✔️If possible, always take them and
never give them
Gross margin = - ✔️✔️selling price - COGS - Adjustments
Markup - ✔️✔️The money that the distributor adds to the cost of goods sold
Percent Gross Margin = - ✔️✔️((Selling Price- COGS)/ Selling Price) * 100%
Percent Markup - ✔️✔️((Selling Price - COGS)/COGS) * 100%
Operating Expense - ✔️✔️All costs necessary to provide services
Selling, General, and Administrative Expenses (SG&A) - ✔️✔️Salaries, Payroll Costs,
Travel, Entertainment cost, etc.
EBITDA - ✔️✔️Earnings before Interest, Taxes, Depreciation, and Amortization
EBITDA = - ✔️✔️Margin - OE - SG&A
What creates the most EBITDA improvement? - ✔️✔️Raising prices
What creates the least EBITDA improvement? - ✔️✔️Growing
EBIT = - ✔️✔️EBITDA - D&A
MRO - ✔️✔️maintenance, repair, and operations
Selling price = - ✔️✔️List Price - Trade Discounts
Net Price = - ✔️✔️selling price - allowable discounts (cash discounts)
net sale - ✔️✔️Actual money received after discounts and adjustments
Commodity pricing - ✔️✔️set by the market
4 P's - ✔️✔️1. Product
2. Performance
3. Processes
4. Presence
Cosmic law of business - ✔️✔️Can be profitable with at least 2 of these:
1. Cheap
2. Good
3. Fast
Power of small numbers - ✔️✔️
Balance sheet items - ✔️✔️
OEM - ✔️✔️Original Equipment Manufacturer
3 end users - ✔️✔️mro, oem, Contractor items
Distributor profitability items - ✔️✔️1. Buy Lower
2. Sell Higher
3. Collect Sooner
4. Pay Later
5. Turn Inventory More Often
6. Increasing Operating Efficiencies
Cash Discounts - ✔️✔️Offered by manufacturer to encourage early payments
Trade Pricing - ✔️✔️Negotiating the actual price that will be paid as opposed to "list
price- trade discounts"
Special Orders - ✔️✔️products with some modification in design, finish, materials, or
packing
Minimum Order - ✔️✔️Manufacturer specifies the minimum allowable order
, Freight Allowed - ✔️✔️Amount that must be purchased to have the manufacturer pay
for the cost of freight
Why are adjustments made? - ✔️✔️substitutions, different quantities/ specifications,
damaged or returned goods
Cash Flow - ✔️✔️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? - ✔️✔️If possible, always take them and
never give them
Gross margin = - ✔️✔️selling price - COGS - Adjustments
Markup - ✔️✔️The money that the distributor adds to the cost of goods sold
Percent Gross Margin = - ✔️✔️((Selling Price- COGS)/ Selling Price) * 100%
Percent Markup - ✔️✔️((Selling Price - COGS)/COGS) * 100%
Operating Expense - ✔️✔️All costs necessary to provide services
Selling, General, and Administrative Expenses (SG&A) - ✔️✔️Salaries, Payroll Costs,
Travel, Entertainment cost, etc.
EBITDA - ✔️✔️Earnings before Interest, Taxes, Depreciation, and Amortization
EBITDA = - ✔️✔️Margin - OE - SG&A
What creates the most EBITDA improvement? - ✔️✔️Raising prices
What creates the least EBITDA improvement? - ✔️✔️Growing
EBIT = - ✔️✔️EBITDA - D&A
MRO - ✔️✔️maintenance, repair, and operations
Selling price = - ✔️✔️List Price - Trade Discounts
Net Price = - ✔️✔️selling price - allowable discounts (cash discounts)
net sale - ✔️✔️Actual money received after discounts and adjustments
