How did you do in our business literacy quiz? Here are the answers.
1 When a company is said to be a "£500m company" what does that mean?
That the company's turnover (or sales in US parlance) are £500m - not its profits or cash in the bank.
2 What is liquidity?
The ease with which an organisation can convert its assets into cash. The chief failing of most dotcoms is poor liquidity - their main "asset" being the promise of future customers.
3 What is the difference between an ISP and an ASP?
An ISP (Internet service provider) acts as an amalgamated carrier and service provider. Meanwhile, the term ASP (application service provider) describes the new breed of software vendors selling, or renting applications over the Net, rather than in shrink-wrapped format. Evidence suggests that distinctions between the two are beginning to blur.
4 What does return on investment (ROI) tell you?
Also known as return on capital employed (ROCE), ROI is calculated by dividing pretax earnings by average investment. It tells you the rate of return you can expect from your investment in a piece of equipment, project or training programme.
5 What is lifetime value?
This refers to the estimated total value of an individual customer to a company over a given "lifetime" (this could be as little as five years). An important concept given the switch in marketing emphasis from mass-marketing (selling a defined portfolio of products to as many customers as possible) to relationship marketing (selling as many products as possible to a select group of customers). Estimating lifetime values is a precarious and often contradictory process - eg a customer may be a poor source of profit per se, but may be in the habit of recommending the company to other more lucrative customers.
6 What is BTO?
Build to order. A concept pioneered by high-tech manufacturers such as Dell, theoretically allowing for the greater customisation of a product. More importantly BTO ensures that the cost of "dead" capital implicit in stock-holding is kept to minimum. As such, BTO is an imp