What is a Principal-Agent Problem? A principal-agent problem arises when there is a conflict of interest between the agent and the principal, which typically occurs when the agent acts solely in his/her own interests. In a principal-agent relationship, the principal is the party that legally appoints the agent to make decisions and take actions on…
What is Little’s Law? Little’s Law is a theorem that determines the average number of items in a stationary queuing system, based on the average waiting time of an item within a system and the average number of items arriving at the system per unit of time. The law provides a simple and intuitive approach…
What is Corporate Social Responsibility (CSR)? Corporate social responsibility (CSR) refers to strategies that companies put into action as part of corporate governance that are designed to ensure the company’s operations are ethical and beneficial for society. Categories of CSR Although corporate social responsibility is a very broad concept that is understood and implemented differently…
What is Project Evaluation Review Technique (PERT)? In project management, the Project Evaluation Review Technique, or PERT, is used to identify the time it takes to finish a particular task or activity. It is a system that helps in the proper scheduling and coordination of all tasks throughout a project. It also helps in keeping…
What is Product Mix? Product mix, also known as product assortment or product portfolio, refers to the complete set of products and/or services offered by a firm. A product mix consists of product lines, which are associated items that consumers tend to use together or think of as similar products or services. Dimensions of a…
What is a Stock Keeping Unit (SKU)? A stock keeping unit or SKU (pronounced “skew”) is a number that is assigned to a product for the purpose of inventory management and ease of tracking. In other words, a stock keeping unit is a unique identifier assigned to each product for easier and more efficient record-keeping….
What is the Average Annual Growth Rate (AAGR)? The average annual growth rate (AAGR) is the average annual appreciation in the value of an investment asset, portfolio, or cash flow. It is determined by taking the numerical mean of specified or calculated year-on-year growth rates. The average annual growth rate is used for many fields…
What is a Bank Draft? A bank draft is a convenient and secure instrument for making large payments without having to withdraw cash from one’s account. Bank drafts are guaranteed by financial institutions and can be used by individuals to make payments to third parties. In most cases, bank drafts can be used to make…
What is a Bank Statement? A bank statement is a monthly financial document that provides a summary of the account holder’s activity. Bank statements are generally prepared by the bank for the account holder at the end of each month. Bank statements can be found online via online banking or be obtained from a branch…
What is Bank Rating? Bank rating is a measure of financial soundness for banks. Just like credit agencies such as Standard & Poor’s (S&P), Moody’s, and Fitch that give credit ratings to individual consumers and corporations, the Federal Deposit Insurance Corporation (FDIC) assigns credit ratings to banks and other financial institutions. Bank ratings are generally…
