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Backward integration:A form of vertical integration that involves the purchase of suppliers.

Companies will pursue backward integration when it will result in improved efficiency and cost
savings. Examples of backward integration are a clothing manufacturer may purchase one of its
suppliers of fabrics to lessen the cost of raw materials. A bank which sells insurance buying an
insurance company.
Forward integration:A business strategy that involves a form of vertical integration whereby
activities are expanded to include control of the direct distribution of its products.A good
example of forward integration is when a farmer sells his/her crops at the local market rather
than to a distribution center.
Project appraisal: is a process of detailed examination of several aspects of a given project
before recommending the same.
Commercial appraisal: The commercial appraisal is concerned with the market for product and
Delphi technique: this is a group decision by experts in which the individual experts act
separately. Their views are pooled together and an attempt is made to arrive at consensus.
Moving average method: the forecast of next year is arrived at by taking the average of the
actual data for a few immediately preceding years.
Weighted moving average method: specific weight is given to the actual data of preceding
years and then the actual data in multiplied with the given weight and then the average of this
data is considered as forcasting for next year.
Curve fitting: is the process of constructing a curve, or mathematical function, that has the best
fit to a series of data points,possibly subject to constraints.
Exponential smoothing method:Statistical technique for detecting significant changes in data
by ignoring the fluctuations irrelevant to the purpose at hand.
End use method: is used for forcasting the demand for intermediate products.
Leading indicator:A measurable economic factor that changes before the economy starts to
follow a particular pattern or trend. Leading indicators are used to predict changes in the
economy, but are not always accurate.
Chain ratio method: makes use of secondary data for forcasting the demand for a particular
Economic appraisal: measures the effect of the project on the whole economy.

Financial appraisal: financial appraisal of project consists of two major areas arriving at the
cost of the project and arriving at the appropriate means of financing the project.
Management appraisal:( see book page 104 nagarajan)
SCBA :when we evaluate the cost and benefit of a project from the view point of the society as
a whole , it is called SCBA.
Shadow price: reflect the real value of a resource (input or output) to society.
Numeraire : a unit of account in which the values of input and output are to be expressed.
CIF (cost, insurance, freight):A trade term requiring the seller to arrange for the carriage of
goods by sea to a port of destination, and provide the buyer with the documents necessary to
obtain the goods from the carrier.
(FOB) Free on board:meaning that the buyer pays for transportation of the goods.

Externalities: effects that are external to the project domain, but have an impact on the
countrys Objectives are known as externalities.
Economic rate of return (ERR): measures the rate of return to the society
DRC (domestic resource cost: measures the domestic resource cost of manufacturing a product
against the cost of importing.
Effective rate of protection ERP : attempts to measure the net protection offered to domestic

Decision tree analysis : a graphical technique that can be used for analyzing the pros and
cons of alternating decisions and choosing the best possible course of actions.
The internal accruals of a business are the accumulation of retained earnings and depreciation

Univariateanalysis :predict the sickness on the basis of single financial ratio

Multivariate analysis : predict the sickness by studying the combined influence of several
financial ratio

Turnkey contracts :A turnkey contract is a contract in which one party takes full
responsibility for the construction and commissioning of a plant. This also includes the
delivering of the plant in full working order to the owner. The constructor assumes responsibility
from beginning to the end.

The experience curve is based on the premise that the more you do something, the easier
and better you do it. In other words, the more experience you have making a product, the faster
and cheaper it is to make.

Slack time :Slack time is a term that refers to the time that an activity can be
delayed. It also refers to the difference between the late and early start times of an

Working capital margin :

DCF ( Discounted cash flow) value :the value derived from
Discounted cash flow (DCF) analysis using future free cash flow projections
and discounts them (most often using the weighted average cost of capital)
to arrive at a present value, which is used to evaluate the potential for

Project rating index :

Granttchart :A Gantt chart is a type of bar chart, developed by Henry Gantt
in the 1910s, that illustrates a project schedule. Gantt charts illustrate the start and
finish dates of the terminal elements and summary elements of a project.

Mutually exclusive projects :Mutually exclusive projects describe a plan

and work schedule that eliminates one party from consideration. Projects are also
said to be mutually exclusive when they cannot be undertaken simultaneously.

Diversification project: When a manufacturer wants to offer nore than one

product , it is described as product diversification.

Sensitivity analysis : a technique that measures the change in the

profitability of a project caused by changes in the factors that affect the cash in
flows of the project.

Plant layout :Plant Layout is the physical arrangement of equipment and

facilities within a Plant. The Plant Layout can be indicated on a floor plan showing
the distances betweendifferent features of the plant.

Deferred credit :Income that is received by a business but not immediately

reported as income. Typically, this is done on income that is not fully earned and,
consequently, has yet to be matched with a related expense.

Currency speculation :

Currency Speculation is the practice of engaging

in risky financial transactions in an attempt to profit from short or medium term
fluctuations in the value of a currency.

Consumption co efficient :

Liquidated damages :Liquidated damages (also referred to as liquidated

and ascertained damages) are damages whose amount the parties designate during
the formation of a contract[1] for the injured party to collect as compensation upon a
specific breach

Time cost trade off :The critical path method assumes that the duration of
an activity depends on the amount of resources assigned to it, and incorporates a
trade-off between its duration and the cost of the assigned resources. More
precisely, the more resources have been assigned to the activity, leading to an
overall increase in the cost, the lower the expected duration of the activity.