NPAT flashcards
NPAT · Build recall with a focused review session.
35 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Accounting equation
- Assets equal liabilities plus owner's equity. Every recorded transaction keeps this identity in balance, so the balance sheet always ties out.
- Gross profit
- Revenue minus cost of goods sold. It shows profit from core trading before operating expenses, interest, and tax are deducted.
- Current ratio
- Current assets divided by current liabilities. A ratio below one suggests the firm may struggle to meet short-term obligations as they fall due.
- Working capital
- Current assets minus current liabilities. Positive working capital indicates funds available for daily operations; negative signals reliance on short-term borrowing.
- Break-even point
- Fixed costs divided by contribution per unit, where contribution is selling price minus variable cost. It is the sales volume at which total profit is zero.
- Double-entry bookkeeping
- Each transaction records equal debit and credit entries in at least two accounts, so total debits always equal total credits in the ledger.
- Price elasticity of demand
- Percentage change in quantity demanded divided by percentage change in price. Absolute values above one mean demand is elastic and revenue-sensitive.
- Opportunity cost
- The value of the next best alternative forgone when choosing one option. It underlies all scarcity-driven economic decisions.
- GDP expenditure formula
- Gross domestic product equals consumption plus investment plus government spending plus exports minus imports, counting final output produced within borders.
- Market equilibrium
- The price at which quantity supplied equals quantity demanded. Above it, surplus pushes prices down; below it, shortage pushes prices up.
- Comparative advantage
- A country gains from trade by specialising where its opportunity cost of production is lowest, even if it is less productive in absolute terms.
- Real interest rate
- Nominal interest rate minus inflation rate. It reflects the actual change in purchasing power a saver or borrower experiences.
- Price ceiling
- A legally imposed maximum price. Set below equilibrium it creates shortage, queues, and black markets because demand exceeds supply.
- Sound argument
- A deductive argument that is both valid and has all true premises. Validity alone concerns structure, not factual correctness.
- Correlation versus causation
- Two variables moving together does not prove one causes the other; confounding factors or reverse causation may explain the relationship.
- Deductive versus inductive reasoning
- Deduction derives specific conclusions from general premises with certainty; induction generalises probable rules from observed cases.
- Primary versus secondary source
- Primary sources are original documents or artefacts from the period; secondary sources interpret, analyse, or summarise primary evidence.
- Utilitarianism
- An ethical theory judging actions by their consequences, aiming to produce the greatest overall good or welfare for the greatest number.
- Theme versus plot
- Plot is the sequence of events in a narrative; theme is the underlying idea or message those events explore.
- AIDA model
- An advertising sequence moving consumers through Attention, Interest, Desire, and Action, with each stage requiring distinct creative and media choices.
- Unique selling proposition
- A specific, defensible benefit that a brand offers and competitors do not, giving consumers a clear reason to choose it.
- Brand equity
- The added value a brand name confers on a product, reflected in awareness, associations, perceived quality, and customer loyalty.
- Gross rating points
- Reach percentage multiplied by average frequency. GRP summarises total advertising delivery for a schedule across a target audience.
- Cost per thousand
- Advertising cost divided by impressions, multiplied by one thousand. CPM compares media efficiency across channels and audiences.
- Positioning map
- A two-axis chart plotting brands on attributes consumers care about, revealing perceptual gaps and unoccupied market space.
- Cognitive dissonance
- Post-purchase doubt when a buyer notices drawbacks of the chosen option; reassurance, warranties, and support messaging reduce it.
- Purchasing power parity
- The principle that identical goods should cost the same across countries when prices are converted at the exchange rate, ignoring trade barriers.
- Tariff versus quota
- A tariff taxes imports, raising their price; a quota caps import quantity. Both typically raise domestic prices and protect local producers.
- Balance of payments
- A record of a country's transactions with the world, comprising the current account plus capital and financial accounts, which must net to zero.
- Most-favoured-nation principle
- A WTO rule requiring a member to grant any trade advantage given to one member equally to all other members.
- Span of control
- The number of subordinates reporting directly to one manager. Wider spans flatten hierarchies; narrow spans add management layers.
- Herzberg two-factor theory
- Hygiene factors such as pay and conditions prevent dissatisfaction, while motivators such as achievement and recognition create genuine satisfaction.
- SMART goals
- Objectives that are Specific, Measurable, Achievable, Relevant, and Time-bound, giving managers clear criteria for tracking performance.
- SWOT analysis
- A planning tool pairing internal strengths and weaknesses with external opportunities and threats to guide strategy formulation.
- Matrix structure
- An organisational design with dual reporting to functional and project managers, improving coordination but risking conflicting priorities.