What is a Voucher? A voucher is an internal document within a company that is issued by the accounts payable (AP) department. It can be seen as a “memorandum” of the liabilities of the company, and it is used to authorize a payment. In each company, there exists an accounts payable department that is in…
What is a Minimum Viable Product (MVP)? A minimum viable product (MVP) is a product development model in which, initially, a product is developed with just sufficient features to satisfy early customers and solicit feedback for future product development. Generally, an MVP must possess the following characteristics: Sufficient value to convince a customer to purchase…
What is a Product Line? A product line refers to an array of related products under the same brand. In other words, a product line is a collection of similar products that are sold to customers. Understanding Product Lines Products under a product line are related either by functionality, target market, price range, or brand….
What is a Licensing Agreement? A licensing agreement is a contract between two parties (the licensor and licensee) in which the licensor grants the licensee the right to use the brand name, trademark, patented technology, or ability to produce and sell goods owned by the licensor. In other words, a licensing agreement grants the licensee…
What is a Joint Probability? A joint probability, in probability theory, refers to the probability that two events will both occur. In other words, joint probability is the likelihood of two events occurring together. Formula for Joint Probability Where: P(A ⋂ B) is the notation for the joint probability of event “A” and “B”. P(A)…
What is A Priori Probability? A priori probability, also known as classical probability, is a probability that is deduced from formal reasoning. In other words, a priori probability is derived from logically examining an event. A priori probability does not vary from person to person (as would a subjective probability) and is an objective probability….
What is Variable Universal Life (VUL) Insurance? Variable Universal Life Insurance is a life insurance policy that builds cash value. The accumulated cash in the policy can be invested in a number of different ways. The investments are chosen by the policyholder, in accordance with their financial goals and risk tolerance. Variable universal policies differ…
What is Hamada’s Equation? Hamada’s Equation falls under the corporate finance umbrella. It is used to differentiate a levered company’s financial risk from its business risk. It combines two theorems: the Modigliani-Miller Theorem and the Capital Asset Pricing Model (CAPM). Hamada’s equation is structured in a way that helps determine, first, a company’s levered beta,…
What is a Keogh Plan? A Keogh Plan is a retirement plan that can be set up by self-employed individuals and those who work for them. Small businesses, partnerships, limited liability companies (LLCs), and sole proprietorships are eligible to establish Keogh plans. Keogh plans are still used today; however, they’ve declined in popularity, with individual/single…
What are the 4 P’s of Marketing? The “4 P’s of Marketing” refer to the four key elements comprising the process of marketing a product or service. They involve the marketing mix, which is a set of tools that a company uses to influence consumers into buying its product. The marketing mix addresses factors such…
