INTRODUCTION :

Asset : something which has a value or can add value in near future
Liability : an obligation to pay something . A company's financial debt or obligations
that arise during the course of its business operations.
Stockholder’s Equity : equity (or owner's equity) is the difference between the
value of the assets and the value of the liabilities of something owned.
Stock Holder : An individual, group, or organization that holds one or more shares
in a company, and in whose name the share certificate is issued.
Stock : Shares are units of ownership interest in a corporation or financial asset that
provide for an equal distribution in any profits, if any are declared, in the form of
dividends.
Inventory: a complete list of items such as property, goods in stock, or the contents
of a building
Property, Plant & Equipment (PP&E) : PP&E is also called tangible fixed assets.
These assets are physical, tangible assets and they are expected to generate economic
benefits for a company for a period of longer than one year. Examples of PP&E include land,
buildings and vehicles.

Accounts Receivable : If the company sells goods or provides services but is yet to
collect payment against the same, it is termed as account receivable.
Notes Receivable : On selling goods on a long term credit to a customer who
premises to pay money on or before a predefined date via a legal note, it is termed
as notes receivable.
Interest Receivable : interest that needs to be collected from the buyer on loan

Accounts Payable(a/p) : It is money owed by a business to its suppliers shown as a

liability on a company's balance sheet. Accounts payable is for other debt owed,
often to a vendor or supplier. It is distinct from notes payable liabilities, which are
debts created by formal legal instrument documents.
Notes Payable : Notes payable is for debt that involves a written promissary note,
usually from a bank or another financial institution.
Interest Payable : interest that needs to be paid by the buyer on loan to the seller
Work in Process & Raw Materials :
Product portfolio : It is the collection of all the products or services offered by a
company. Product portfolio analysis can provide nuanced views on stock type,
company growth prospects, profit margin drivers, income contributions, market
leadership and operational risk.
Portfolio : a range of investments held by a person or organization.

Design for manufacturability (DFM) : is the process of proactively designing

products to (1) optimize all the manufacturing functions: fabrication, assembly, test,
procurement, shipping, delivery, service, and repair, and (2) assure the best cost,
quality, reliability, regulatory compliance, safety, time-to-market, and customer
satisfaction.
Material efficiency : It is a description or metric which expresses the degree in
which raw materials are consumed, incorporated, or wasted, as compared to
previous measures in construction projects or physical processes. Making a usable
item out of thinner stock than a prior version increases the material efficiency of the
manufacturing process.
Rationalize Raw materials : Reduce materials and required sizes to reduce
inventory items that need to be managed throughout the Supply Network; Optimize
the total raw material spent.

Rationalization : It is a reorganization of a company in order to increase its

efficiency. This reorganization may lead to an expansion or reduction in company
size, a change of policy, or an alteration of strategy pertaining to particular products.

Materials sourcing on a national/global basis : To find better ways of sourcing

materials national or global level depending on location.

Standard components : It is when manufacturers buy in a standard component

they would use a pre-made product manufactured in thousands or millions in the
production of a different final product. They help products to be the same in
consistency, they are quick and easy to use in batch production of products.

Obsolete materials/inventory : It is a term that refers to inventory that is at the end

of its product life cycle. This inventory has not been sold or used for a long period of
time and is not expected to be sold in the future. This type of inventory has to be
written down and can cause large losses for a company.

Just-in-time (JIT) : It is an inventory strategy companies employ to increase

efficiency and decrease waste by receiving goods only as they are needed in the
production process, thereby reducing inventory costs. This method requires
producers to forecast demand accurately.

Terms on materials :
Accounts, Notes & Interest Receivable :

Days-receivable / Accounts Receivable Days : It is the length of time it takes to

clear all Accounts Receivable, or how long it takes to receive the money for goods it
sells.
(Accounts receivable ÷ Annual revenue) x Number of days in the year

Credit risk : It refers to the risk that a borrower may not repay a loan and that the
lender may lose the principal of the loan or the interest associated with it. Credit risk
arises because borrowers expect to use future cash flows to pay current debts; it's
almost never possible to ensure that borrowers will definitely have the funds to repay
their debts.

Customer Segmentation : Segmenting your market means selling to a specific

target audience or audiences.

Differentiate credit treatment of customers/segments : Different credit treatment

ways for different customers.

Credit Assessment Process :

https://www.openeir.ie/uploadedFiles/Content/Customer_Service/Credit%20Assess
ment%20Process.pdf

3 C’s of CAP are :

Character : Tell us about yourself: who you are, how well do you understand the
business and how well have you defined your goals.
Cash flow : Have you got enough cash to repay the loan, pay your wages and keep
the business going?
Collateral : We need to know about your security. Assets such as premises, even
stocks and shares.

Delinquent accounts : (tending to commit minor crime ; failing in one's duty) Those
accounts which are likely to not pay back

Credit/Loan portfolios : they are the major asset of banks, thrifts, and other
lending institutions. The value of a loan portfolio depends not only on the interest
rates earned on the loans, but also on the quality or likelihood that interest and
principal will be paid.

Receivables performance management : It is same as collection agencies

Accounts, Notes & Interest Payable :

Days Sales Outstanding : measure of the average number of days that it takes a
company to collect payment after a sale has been made
(Accounts receivable ÷ Total credit sales) x Number of days

Credit rating : It is an assessment of the creditworthiness of a borrower in general

terms or with respect to a particular debt or financial obligation. A credit rating can be
assigned to any entity that seeks to borrow money — an individual, corporation,
state or provincial authority, or sovereign government.

Billing cycle : is the interval of time from the end of one billing, or invoice, statement
date to the next billing statement date.

Payment cycle : Period of time between billing and receipt of payment.

Debt portfolio : It is primarily a list of the financial necessities of a certain company.

The investments in these cases are normally meant for longer periods of time. Adebt
portfolio also takes into account the inconsistencies in working capitals. Proper
management is an important part of the debt portfolios.

Alignment of A/P systems and processes with days outstanding strategy :

Assessment and benchmarking of A/P performance :