LinkedIn Pizza Principles II

It pays to be empowered! Here are some more pizza analogies to help broaden your business knowledge horizons:

Bank overdraft- when any chequing accounts held in the pizzeria’s name for which the pizzeria has written a cheque, record a balance of comparatively less dollars and cents for same

Carrying amount- the value of an asset owned by the pizzeria, minus the gradual loss in value of the asset, due to years’ wear and tear during usage, and, its length of time owned

Capital budgeting- how the pizzeria plans to allocate its financial resources for significant purchases such as an oven, a refrigerator or freezer

Capital expenditure- the amount spent for example, on purchasing any pizza-making equipment or machinery for the pizzeria

Chief Executive Officer/CEO- the person who has the responsibility of carrying out the policies of the pizzeria owner or, its Board of Directors

Chief Financial Officer/CFO- the highest-ranked accounting officer with responsibility for managing the pizzeria’s finances

Chief Operating Officer/COO- the person who is responsible for the general day-to-day operations of the pizzeria, apart from the owner

Consignee- the person or company who receives the pizzas to be sold

Consignor- the person or company who sells and delivers the pizzas to the consignee

Consigned goods- any pizza-related merchandise, equipment or ingredients not owned by the person in possession of the final product/ the pizzeria owner

Debt ratio- the ratio or numerical comparison of the pizzeria’s total liabilities to its total assets e.g. a debt ratio of $80 (assets) to $20 (liabilities), has a debt ratio of $80 divided by $20, or in percentages, 25 percent

Debt service- the total amount of what the pizzeria has to repay a debtor, for example, a financial institution, in terms of the original borrowed amount, plus, all added interest

Decentralization: Can be two-fold e.g. (i) Physically- Spreading the locations of the pizzeria from one main area to different geographical areas; (ii) Internally- Passing some aspects of decision-making from the owner/manager of the pizzeria to other stakeholders who are physically closer to the actual work, such as supervisors or employees

Economies of scale: the profits or other cost advantages (such as spreading costs over a larger amount of goods) that are realised by the pizzeria, when employee production increases. It can be internal or external, depending on either internal management policies, or external, due to factors or circumstances outside of the pizzeria’s control. The general rule is the larger the size of the company, the more profits and other cost advantages can be realised

Payroll: what financial compensation the pizzeria management must give its employees. The payroll is usually presented on a set date on either a weekly, fortnightly, or, monthly basis.

Taxes- mandatory (i.e. legal) contributions charged by the respective, applicable local, regional or state bodies on the pizzeria (if it is registered as a limited liability company and therefore, can be legally treated as a separate entity from the owner) or, on the pizzeria owner

Stay educated and empowered!

Keywords: LinkedIn Local Caribbean, accounting, business, definitions, empowerment