Page 345 - (DK) The Business Book

GLOSSARY 343

Publicly traded company banks, but are not subject to when two companies or units of a
In a publicly traded company the supervisory and regulatory burdens. business are joined together.
liability of members is limited to
the value of their investment in Share A unit of ownership in a Takeover The purchase of one
the company. A publicly trated company, signifying ownership business by another.
company’s shares are traded on the of stock.
stock market and can be bought Treasury function Using a
and sold by the general public. Shareholder An individual or company’s treasury (its financial
organization that holds shares in operations department) to achieve
Recession The period of time in a company. A shareholder is also the optimum balance between
which the total output of an known as a stockholder. liquidity and income from the
economic area decreases. company’s cash flows. Other
Speculating Making high-risk activities can include profit
Reserves In business, profits investments that could yield generation, risk management,
retained by a company for future use large returns, but bear a high risk planning and operations, and
and not distributed to shareholders. of resulting in loss. shareholder relations.

Return on Equity (ROE) A Start-up A business that has—or is Unique Selling Proposition (USP)
measure of a company’s financial being—launched from scratch. A marketing strategy whereby
performance, based on profit and the companies distinguish their products
equity of shareholders. Stock The equity stake of the from their rivals by offering
shareholders in a business. The customers something that their
Return on Investment (ROI) The term also describes goods owned competitors do not or cannot offer.
ratio of money gained to the amount by a business that are held on its
invested in the company. premises or in a warehouse, and are Value chain The theory of US
available for sale or distribution. professor Michael Porter that the
Revenue Also known as sales and chain of a company’s interrelated
turnover, the income earned by a Stock market A place where bonds activities can be exploited to add
business over a period of time. The and stocks or shares in a company value to its products or services.
revenue earned depends on the price are bought and sold. These activities relate to the flow of a
and number of items sold. product from production to purchase
Supply The amount of a product by the customer.
Risk In investment terms, risk or service that is available for
is the uncertainty associated with consumers to buy. Venture capital Funds invested in
an investment or asset. A high-risk a start-up at its earliest phase.
investment, for example, may yield a Supply chain The people and
high return; but if unsuccessful, processes involved in the production Viral marketing The launching of a
it could cause the investor to lose and distribution of goods or services. product or service via the Internet or
everything. Operational risk is the social media to attract rapid and
risk of failure due to shortcomings in Surplus An excess in supply over widespread consumer interest.
procedures, people, or systems. demand—when the production
of goods, services, or resources Working capital The capital
Securities An umbrella term for a exceeds their consumption. available for use in the day-to-day
range of investment instruments operations of a business, calculated
that are traded on stock markets, Sustainability A strategy in as the difference between current
such as bonds, options, and shares. which the business ensures that assets and current liabilities.
the resources it uses will be
Shadow bank A nonbank financial replaced, such as a paper
institution—such as the treasury manufacturer planting trees.
function of a business—that lends
money to businesses. Shadow banks Synergy The supposed additional
offer similar services as traditional performance benefit that is achieved