1.

The ideal amount of cash that a company wishes to hold in reserve at any given point in
time. This figure hopes to strike a balance between the investment opportunity costs of
holding too much cash and the balance sheet costs of holding too little. Companies with
excess cash on hand may be missing out on investment opportunities, while companies that
are cash poor can often be forced to make otherwise undesirable transactions to free up
more operating capital.

2. Accounting: Small sum of money kept at hand to meet small expenses. Also called imprest
amount.

3. An area where important documents are stored safely in the event the business property is
destroyed or theft is attempted.

4. Moving funds between different accounts in the same or different banks, through the use of
wire transfer, automatic teller machines, or computers, but without the use of paper
documents.

5. Short-term (usually less than one year, typically three months) maturity promissory note
issued by a national (federal) government as a primary instrument for regulating money
supply and raising funds via open market operations. Issued through the country's central
bank, T-bills commonly pay no explicit interest but are sold at a discount, their yield being
the difference between the purchase price and the par-value (also called redemption value).
This yield is closely watched by financial markets and affects the yield on municipal and
corporate bonds and bank interest rates. Although their yield is lower than on other
securities with similar maturities, T-bills are very popular with institutional investors
because, being backed by the government's full faith and credit, they come closest to a risk
free investment.

6. Promissory note (issued by financial institutions or large firms) with very-short to short
maturity period (usually, 2 to 30 days, and not more than 270 days), and secured only by
the reputation of the issuer. Rated, bought, sold, and traded like other negotiable
instruments, commercial paper is a popular means of raising cash, and is offered generally
at a discount instead of on interest bearing basis. Also called paper. See also government
paper.

7. Open ended mutual fund that invests in highly liquid short-term financial instruments (with
maturities typically 90 days to less than one year) such as negotiable certificates of deposit
(CDs), commercial paper, and treasury bills; and pays money market account (MMA) rates
of interest. MMFs differ from other mutual funds in that their market value remains
constant at $1 per share, only the interest rate paid by them fluctuates. They also offer
check writing privileges, but are not protected under the deposit insurance schemes. Also
called money market mutual fund.
8. Countersigning (endorsement) of a bill of exchange by the buyer's (or importer's) bank.
Bankers acceptance establishes that payment of the bill on its maturity date is now
guaranteed by the endorsing bank. Banks agree to countersign a bill of exchange when they
are comfortable with the buyer's financial strength and stability, and on payment of the
acceptance fee.

9. Stock (shares) that represents ownership of a firm. Equity securities usually provide steady
income as dividends but may fluctuate significantly in their market value with the ups and
downs in the economic cycle and the fortunes of the issuing firm.

Debt instrument such as a bond, debenture, or promissory note which is issued with a
promise of repayment on a certain date at a specified rate of interest.

10. Actual interest paid on a loan, or earned on a deposit account, depending on the frequency
of compounding or effect of inflation. It is different from the nominal rate of interest which
ignores compounding and other factors.

11. Entire network of entities, directly or indirectly interlinked and interdependent in serving
the same consumer or customer. It comprises of vendors that supply raw material,
producers who convert the material into products, warehouses that store, distribution
centers that deliver to the retailers, and retailers who bring the product to the ultimate
user. Supply chains underlie value-chains because, without them, no producer has the
ability to give customers what they want, when and where they want, at the price they
want. Producers compete with each other only through their supply chains, and no degree
of improvement at the producer's end can make up for the deficiencies in a supply chain
which reduce the producer's ability to compete.

12. The reorder point (ROP) is the level of inventory which triggers an action to replenish that
particular inventory stock. It is a minimum amount of an item which a firm holds in stock,
such that, when stock falls to this amount, the item must be reordered. It is normally
calculated as the forecast usage during the replenishment lead time plus safety stock. In
the EOQ (Economic Order Quantity) model, it was assumed that there is no time lag
between ordering and procuring of materials. Therefore the reorder point for replenishing
the stocks occurs at that level when the inventory level drops to zero and because instant
delivery by suppliers, the stock level bounce back.

13. Safety stock term used by logisticians to describe a level of extra stock that is maintained to
mitigate risk of stockouts (shortfall in raw material or packaging) due to uncertainties in
supply and demand. Adequate safety stock levels permit business operations to proceed
according to their plans.[1] Safety stock is held when there is uncertainty in demand,
supply, or manufacturing yield; it serves as an insurance against stockouts.

14. Manufacturing resource planning (MRP II) is defined as a method for the effective planning
of all resources of a manufacturing company. Ideally, it addresses operational planning in
units, financial planning, and has a simulation capability to answer "what-if" questions and
extension of closed-loop MRP.
15. Economic order quantity (EOQ) is an equation for inventory that determines the ideal order
quantity a company should purchase for its inventory given a set cost of production,
demand rate and other variables. This is done to minimize variable inventory costs, and the
formula takes into account storage, or holding, costs, ordering costs and shortage costs.

16. One of the first software based integrated information systems designed to
improve productivity for businesses. A materials requirement planning (MRP) information
system is a sales forecast-based system used to schedule raw material deliveries and
quantities, given assumptions of machine and labor units required to fulfill a sales forecast.

17. Accounts receivable financing is a type of asset-financing arrangement in which a company

uses its receivables outstanding invoices or money owed by customers as collateral in
a financing agreement. In this agreement, an accounts receivables financing company, also
called a factoring company, gives the original company an amount equal to a reduced value
of the unpaid invoices or receivables.

18. A trust receipt is a notice of the release merchandise to a buyer from a bank, with the bank
retaining the ownership title to the released assets. In an arrangement involving a trust
receipt, the bank remains the owner of the merchandise, but the buyer is allowed to hold
the merchandise in trust for the bank, for manufacturing or sales purposes.