|
May 22, 2007
The Astron Road Show
The Astron Road
Show kicks into high gear in the next few weeks! On
Wednesday, May 23rd, National Director
Michael Maciekowich will exhibit at the SHRM of
Tompkins County’s annual conference. HR: Today
and Beyond will be held at Ithaca College in
Ithaca, NY.
Follow this link to learn more about the
conference.
Mike continues his tour of upstate
New York on June 1st. Mike will exhibit
at the North Country Human Resource Association
conference in Watertown, NY.
Human Resources...Setting the Pace in
2007 will be held at the
Watertown Best Western / Carriage House.
Contact Mike for more information regarding
registration.
Finance Terms Made Simple
Human Resources may find itself
at odds with Finance when seeking approval for
proposals. While both hopefully have the
organization's best interests in mind, different
approaches and terminologies underscore the
differences that often exist between these two
departments. In this Astronology, we present
a glossary of terms useful when seeking the buy-in
of CFOs and Finance Departments.
ROI: Return on Investment. This refers to how
much profit or cost saving is realized in a given
period of time - usually a year - as the result of a
particular expenditure. Human resources
professionals who are sometimes accused of
presenting "touchy-feely" rationales for monetary
expenditures can use ROI calculations to help
develop the financial case for a proposal in a way
an organization's financial staff can readily
understand.
While useful from an accounting point of view, the
following five terms are also critical for designing
and administering sales compensation plans:
Revenue: The total influx of funds into an
organization, usually resulting from the sales of
goods or services, calculated before costs or
expenses are deducted. This figure includes all
sales made to customers / clients in addition to
other income arising from business operations.
Expenses: All costs deductible from revenues.
Gross margin: Sales revenue minus the cost of
the goods sold. This term is often used as a
performance measure.
Net income: Revenue minus expenses, including
maintenance, taxes, and losses. This term is
synonymous with the terms net earnings, net profit,
and bottom line.
Profit margin: The percentage of total
revenues that net income represents. This term is
often mistakenly used as a synonym for net income or
profit. If total revenue for a given period is
$12,000, and expenses are $10,000, the net income
would be $2,000, while the profit margin would be
16.67%. Acceptable profit margins vary widely by
industry.
Value added: The sales price of goods or
services minus the cost of any raw materials or
inputs purchased elsewhere. Success is often
measured by how much value an organization can add
to its goods or services.
ROA: Return on assets; the ratio of net
earnings to total assets. Sometimes used as a
measurement in executive incentive compensation
plans.
Asset: Anything owned by an organization or
an individual with commercial or exchange value,
including claims against others. Accounts
receivable, product inventory, and buildings owned
by the company are examples of assets. Often
contrasted with liability.
Liability: Debt or responsibilities owed by
an organization that must be paid in the future.
Examples of liabilities are accounts payable, bonds
payable, and taxes payable.
Deferral of taxes: Postponement of taxes to a
later payment period, often by recognizing income or
gain at a later time, such as through qualified
retirement plans.
Tax incentives: Benefits that reduce pre-tax
income, resulting in less tax paid by both employer
and employee. New York City's
TransitChek program is one example.
Earning per share: An organization's net
income divided by total shares outstanding, adjusted
for common stock equivalents. This is often used as
the measurement in executive incentive compensation
programs.
Balance sheet: A detailed statement of an
organization's finances, showing assets,
liabilities, and net worth. The balance sheet
follows the formula assets = liabilities + net
worth. Net worth can be comprised of owner's equity
and retained earnings. The balance sheet describes
the financial well being of an organization on a
given date.
Income statement: A financial statement
including revenues and expenses incurred during a
particular period of time. The business equivalent
of your personal checkbook.
Present value: The current value of a cash
payment, good, or service, discounted at an
appropriate interest rate. By the logic of present
value, $5 received five years from now is worth less
than $5 received today. Using present-value
formulae, assumptions about future interest rates
are applied to produce estimates of the current
worth of a dollar delivered at some specific point
in the future. Such formulae are useful in
determining ROI for proposed initiatives.
Days in Receivables: Average collection
period, or how long it takes an organization to
collect on invoices sent out for work performed /
goods sold. The longer the average collection
period, the greater the potential negative impact on
cash flow.
Wonder what your fellow readers think about critical HR topics? Is your organization unique from or similar to others?
Click here to view the results of our past polls!
If you have a topic you would like addressed in Astronology, or some feedback on a past article, don't hesitate to tell us! Simply reply to this e-mail. See your question answered, or comments addressed, in an upcoming issue of Astronology.
Looking for a top-notch presenter for your human resource organization's meeting? Both Jennifer Loftus and Michael Maciekowich present highly-rated sessions on a variety of compensation and employee retention issues. For more information, send an e-mail to
info@astronsolutions.com.
Are you reading a pass-along copy of Astronology? Click on
this button
to start your own subscription today!
Send inquiries to
info@astronsolutions.com or call 800-520-3889, x105.
We hold your e-mail address in trust. Astron Solutions promises never to share or rent your personal information. We also promise never to send you frivolous e-mails and will allow you to leave our list, at your option, at any time.
To remove yourself from this list, please follow your personalized subscriber link at the bottom of your Astronology alert e-mail.
Copyright 2007, Astron Solutions, LLC
ISSN Number 1549-0467
|
|