A Acid-test ratio A liquidity ratio that looks at whether a business can pay for current liabilities out
of cash and near-cash assets (it ignores the value of stocks)
Aims / goals General statements of what a business intends to achieve. Precise details of
those intentions are set out in objectives
Ansoff's Matrix A strategic model for helping a business analyse the relationship between
general strategic direction and suitable marketing strategies
Arbitration An alternative to a court of law in determining legal and employment disputes.
Involves a specialist outsider being asked to make a decision on a dispute
Asset turnover A ratio that calculates the relationship between revenues and the total assets
employed in a business
Average rate of A measure of the total accounting return from an investment project
return
B Balance sheet The financial statement that provides a snapshot of the assets and liabilities of a
business at a particular date
Business unit How a business attempts to compete successfully in a particular market
strategy
C Capital Expenditure on assets which are intended to be kept in the business (e.g. IT
expenditure systems, machinery) rather than sold or turned into products
Capital intensity The extent to which production or operations depend on investment in and use
of capital – i.e. machinery, IT systems, buildings etc
Cash flow Specific objectives set by a business for cash-flow generated by a business
targets
Centralisation An organisational structure where authority rests with senior management at the
centre of the business
Competitive Skills, competences, resources and other advantages that enable a business to
advantage out-perform its competition
Conciliation A way of mediating industrial disputes to gain agreement without going to
arbitration
Core workers Employees who are part of the core workforce of a business – central to the
business activities
Corporate Objectives that relate to the business as a whole. Usually set by top management
objectives
Corporate Concerned with the overall purpose and scope of the business activities
strategy
Corporation tax The tax levied on the profits of companies. The percentage varies depending on
the size of the profits earned; typically 20-30%
Correlation A measure of how close the relationship it (positive or negative) between an
independent variable and a dependent variable
Cost leadership A business strategy concerned with aiming to be the lowest-cost producer in an
industry. Usually requires exploitation of economies of scale
Cost A strategy of achieving the most cost-effective way of delivering goods and
minimisation services to the required level of quality
Critical path Project management tool that uses network analysis to help manage complex
analysis (CPA) and time-sensitive operations
Current ratio A simple and popular measure of liquidity that assess the ability of current assets
(e.g. cash, stocks) to finance current liabilities (e.g. trade creditors)
Customer The process of building a long-term, profitable relationship between a business
relationship and its customers
management
(CRM)
, D Debentures A long-term source of finance – a debenture is a form of bond or long-term loan
issued by a company
Decentralisation An organisational structure where authority is delegated further down the
hierarchy, away from the centre
Delayering The process of removing one or more layers from the organisational structure
Depreciation An accounting estimate of the fall in value of a fixed asset over time
Discount factor The multiplication factor that converts a projected cost or benefit in a future year
into its present value
Diseconomies Factors which result in higher unit costs as production output reaches too high a
of scale level
Diversification The strategy of trying to enter new markets with new products (from Ansoff
matrix)
Dividend yield A measure of shareholder return – calculated by comparing the dividend per
share by the share price
Dividend Amounts paid to shareholders out of the profits earned by a company.
Downsizing The reduction in the scale and resources of a business, usually involving job
losses and/or the sale or closure of business units
E Economies of Cost advantages that a business can exploit as a result of expanding its scale of
scale production. Economies of scale reduce the average (unit) cost of production
Efficiency A measure of the ability of a business to achieve the required level of production
whilst minimising the use of resources
Extrapolation The use of trends established by historical data to make predictions about future
values
F Flexible working The range of employment options designed to help employees balance work and
home life (e.g. part-time, job-sharing, home-working, annualised hours contracts)
Functional Set for each major business function – designed to ensure that the corporate
objectives objectives are met
G Gap analysis Analysis of the difference between the workforce needs or a business and its
current capabilities
Gearing A ratio that focuses on the long-term financial stability and capital structure of a
business. The gearing ratio measures the proportion of assets in a business that
are financed by borrowing
Going concern A business that is viable and able to continue in business for the foreseeable
future
Goodwill An intangible asset that can be included in a balance sheet = the difference
between the net assets of a business acquired and the price paid for the business
Growth rate The percentage growth over a particular period. Market growth rates are
typically quoted in terms of percentage growth per year
H Hard HRM An approach to HRM based on treating employees as resources in the same way
as any other business resource
Human Strategies for managing people in order to achieve business objectives
resource
management
(HRM)
I Income A financial statement that summarises the trading results of a business over a
statement specific period – usually one year
Industrial Where a business decides to stay in its existing location despite potentially better
inertia locations being available to it
Innovation Putting an new idea or approach into action – the commercial exploitation of
ideas
of cash and near-cash assets (it ignores the value of stocks)
Aims / goals General statements of what a business intends to achieve. Precise details of
those intentions are set out in objectives
Ansoff's Matrix A strategic model for helping a business analyse the relationship between
general strategic direction and suitable marketing strategies
Arbitration An alternative to a court of law in determining legal and employment disputes.
Involves a specialist outsider being asked to make a decision on a dispute
Asset turnover A ratio that calculates the relationship between revenues and the total assets
employed in a business
Average rate of A measure of the total accounting return from an investment project
return
B Balance sheet The financial statement that provides a snapshot of the assets and liabilities of a
business at a particular date
Business unit How a business attempts to compete successfully in a particular market
strategy
C Capital Expenditure on assets which are intended to be kept in the business (e.g. IT
expenditure systems, machinery) rather than sold or turned into products
Capital intensity The extent to which production or operations depend on investment in and use
of capital – i.e. machinery, IT systems, buildings etc
Cash flow Specific objectives set by a business for cash-flow generated by a business
targets
Centralisation An organisational structure where authority rests with senior management at the
centre of the business
Competitive Skills, competences, resources and other advantages that enable a business to
advantage out-perform its competition
Conciliation A way of mediating industrial disputes to gain agreement without going to
arbitration
Core workers Employees who are part of the core workforce of a business – central to the
business activities
Corporate Objectives that relate to the business as a whole. Usually set by top management
objectives
Corporate Concerned with the overall purpose and scope of the business activities
strategy
Corporation tax The tax levied on the profits of companies. The percentage varies depending on
the size of the profits earned; typically 20-30%
Correlation A measure of how close the relationship it (positive or negative) between an
independent variable and a dependent variable
Cost leadership A business strategy concerned with aiming to be the lowest-cost producer in an
industry. Usually requires exploitation of economies of scale
Cost A strategy of achieving the most cost-effective way of delivering goods and
minimisation services to the required level of quality
Critical path Project management tool that uses network analysis to help manage complex
analysis (CPA) and time-sensitive operations
Current ratio A simple and popular measure of liquidity that assess the ability of current assets
(e.g. cash, stocks) to finance current liabilities (e.g. trade creditors)
Customer The process of building a long-term, profitable relationship between a business
relationship and its customers
management
(CRM)
, D Debentures A long-term source of finance – a debenture is a form of bond or long-term loan
issued by a company
Decentralisation An organisational structure where authority is delegated further down the
hierarchy, away from the centre
Delayering The process of removing one or more layers from the organisational structure
Depreciation An accounting estimate of the fall in value of a fixed asset over time
Discount factor The multiplication factor that converts a projected cost or benefit in a future year
into its present value
Diseconomies Factors which result in higher unit costs as production output reaches too high a
of scale level
Diversification The strategy of trying to enter new markets with new products (from Ansoff
matrix)
Dividend yield A measure of shareholder return – calculated by comparing the dividend per
share by the share price
Dividend Amounts paid to shareholders out of the profits earned by a company.
Downsizing The reduction in the scale and resources of a business, usually involving job
losses and/or the sale or closure of business units
E Economies of Cost advantages that a business can exploit as a result of expanding its scale of
scale production. Economies of scale reduce the average (unit) cost of production
Efficiency A measure of the ability of a business to achieve the required level of production
whilst minimising the use of resources
Extrapolation The use of trends established by historical data to make predictions about future
values
F Flexible working The range of employment options designed to help employees balance work and
home life (e.g. part-time, job-sharing, home-working, annualised hours contracts)
Functional Set for each major business function – designed to ensure that the corporate
objectives objectives are met
G Gap analysis Analysis of the difference between the workforce needs or a business and its
current capabilities
Gearing A ratio that focuses on the long-term financial stability and capital structure of a
business. The gearing ratio measures the proportion of assets in a business that
are financed by borrowing
Going concern A business that is viable and able to continue in business for the foreseeable
future
Goodwill An intangible asset that can be included in a balance sheet = the difference
between the net assets of a business acquired and the price paid for the business
Growth rate The percentage growth over a particular period. Market growth rates are
typically quoted in terms of percentage growth per year
H Hard HRM An approach to HRM based on treating employees as resources in the same way
as any other business resource
Human Strategies for managing people in order to achieve business objectives
resource
management
(HRM)
I Income A financial statement that summarises the trading results of a business over a
statement specific period – usually one year
Industrial Where a business decides to stay in its existing location despite potentially better
inertia locations being available to it
Innovation Putting an new idea or approach into action – the commercial exploitation of
ideas
