Operational Efficiency

Allowed Time
The total time in which a job should be completed at standard performance, inclusive of allowances for fatigue, rest, personal needs, and contingencies, commonly referred to as Standard Time.
Before-Tax Cash Flow
Before-Tax Cash Flow (BTCF) represents the cash generated by an asset or a business before deducting income tax payments or adding income tax benefits. It's a critical measure for assessing an investment's or business's potential earnings and operational efficiency.
Capacity Planning
Capacity planning is a long-term strategic process that determines the production capacity needed by an organization to meet changing demands for its products.
Capacity Usage Variance
Capacity Usage Variance (CUV) measures the difference between the actual hours worked and the budgeted hours, specifically in relation to fixed overheads. It is an essential metric in manufacturing and production, providing insights into operational efficiency and resource utilization.
Cash Flow to Total Debt Ratio
A ratio for assessing the solvency of a company, calculated by dividing the cash flow from operations by the total liabilities. It indicates a company's ability to satisfy its debts.
Dead Time
A period during which a worker is idled due to machine malfunction or interruption of materials flow; also known as downtime. Dead time is a direct cost to the company.
Delivery Lead Time
The interval between the placement of an order for replenishing stock and the receipt of that ordered item. It is a key metric in supply chain and inventory management, influencing operational efficiency.
Downtime
Downtime refers to the period during which a system, service, or equipment is not operational or is unavailable. This term is often used in various fields including manufacturing, computing, and telecommunications.
Duration Driver
Duration Driver refers to a measure of the amount of time required to perform an activity, especially when there is significant variance in the time taken to complete different activities.
Efficiency Ratio
An efficiency ratio is a measure used to assess the efficiency of labor or an activity over a period by comparing the standard hours allowed for production to the actual hours taken. This metric, typically expressed as a percentage, helps in evaluating how well resources are utilized within a production process.
Experience Curve
The Experience Curve is a production phenomenon where unit costs decline as volume increases. This concept highlights the cost advantages gained from efficiency improvements, skill enhancements, process optimizations, and material cost reductions associated with increased production.
Financial Analysis
Financial analysis involves evaluating businesses, projects, budgets, and other financial entities to determine their performance and suitability. This analysis is used to gauge a company’s financial health and operational efficiency.
Indirect Labour
Personnel not directly engaged in the production of a product or cost unit manufactured by an organization. Examples of indirect labour include maintenance personnel, cleaning staff, and senior supervisors, such as foremen.
Internal Audit
An internal audit is a self-conducted examination of an organization's operations, intended to evaluate and improve the effectiveness of internal controls, risk management, and governance processes.
Internal Auditor
An internal auditor is an employee who is responsible for providing independent and objective evaluations of the company's financial and operational business activities. They assess compliance with laws and regulations, ensure policies are effective, and help maintain organizational integrity.
Internal Business-Process Perspective
The internal business-process perspective is a part of the balanced scorecard framework, focusing on the internal operations that enable companies to deliver value to customers and shareholders. This perspective examines the efficiency and effectiveness of internal processes and seeks to improve them continually.
Internal Control System
A comprehensive system of controls designed to facilitate orderly and efficient business operations, ensure adherence to management policies, safeguard assets, and maintain accurate and complete records.
Managed Costs
Managed costs are specific expenses that a company can control or influence through internal decisions, strategic planning, and efficient resource management. Careful handling of managed costs can significantly impact a company's operational efficiency and overall profitability.
Management by Walking Around (MBWA)
Management by Walking Around (MBWA) is an innovative management technique that emphasizes informal communication, direct engagement, and real-time observation in the workplace. The objective of MBWA is to foster a harmonious organizational culture, ensuring effective collaboration between management and employees while keeping management informed of the latest operational developments.
Maximum Capacity
Maximum capacity refers to the highest amount or output that a system, facility, company, or equipment can handle under specified conditions without having to violate specific regulations or operational constraints.
Mismanagement
Mismanagement refers to poorly managed activities within an organization. These operations fail to achieve their goals, are extremely wasteful, and generally indicate administrative procedures that are not well thought out or directed.
Net Working Capital
Net Working Capital (NWC) is a financial metric that represents the difference between a company's current assets and its current liabilities. It highlights a firm's short-term financial health and operational efficiency.
Operating Ratio
Operating ratios are financial metrics used to measure and analyze a company's operational efficiency by relating various income and expense figures from the profit and loss statement to each other and to balance sheet figures.
Production Worker
Production workers are employees directly involved in the manufacturing processes of an organization, executing tasks necessary to produce goods. These individuals are distinct from supervisory and clerical employees and are often referred to as production line workers.
Return on Sales (ROS)
Return on Sales (ROS) is a key financial performance metric that calculates net pre-tax profits as a percentage of net sales, serving as a useful measure of overall operational efficiency compared with prior periods or other companies.
Revenue Management (Yield Management)
Revenue management, also known as yield management, employs sophisticated algorithms and data analysis to forecast demand and adjust pricing dynamically, optimizing revenue for industries with fixed and perishable resources.
Rightsizing
Rightsizing is the restructuring and rationalization of an organization to improve effectiveness and cut costs without involving a comprehensive downsizing. It can also mean adjusting the size of an organization to align with current business demands, though it's typically associated with moderate and controlled downsizing.
Sequence
Order of occurrence; process or fact of following in order. A preconceived arrangement or pattern guiding the execution of steps within a system, event, or process.
Slack
The term 'slack' refers to periods of reduced activity or efficiency within a business, manufacturing, or operations context. These periods are generally characterized by a slowdown in demand, productivity, or throughput.
Standard Operator Performance
Standard Operator Performance refers to the established benchmark or expected level of performance for an operator in a specific role or task within an organization.
Standard Variable Overhead Cost
Standard variable overhead cost refers to a specific type of standard cost derived from the standard time allowed for an operation or product production and the standard variable overhead absorption rate per unit time for that operation or product.
Stock Control
Stock control, also known as inventory control, refers to the processes and systems used to oversee the ordering, storage, and use of components that a company uses in the production of the items it sells, as well as the finished products themselves.
Stockout Cost
Stockout cost refers to the costs incurred by a firm when its current inventory is exhausted for one or more items. Lost sales revenue is a primary consequence when the firm is unable to meet current orders because of a stockout condition.
Straight-Line Production
Straight-line production is a traditional production-line method where all parts of the process are arranged sequentially on a straight production line, facilitating the efficient, step-by-step assembly of each piece.
Synergy in Accounting and Business
Synergy describes the added value created by merging two separate firms, leading to a greater return than the sum of their individual contributions. This enhanced return is typically anticipated during merger or takeover activities.
Terotechnology
A multidisciplinary field that integrates management, financial, and engineering skills for the optimal installation, operation, and maintenance of plant and equipment, focusing on life-cycle costing.
Theory of Constraints (TOC)
The Theory of Constraints (TOC) is a management philosophy that focuses on identifying and managing the most critical limiting factor (constraint) that stands in the way of achieving a goal and then systematically improving that constraint until it is no longer the limiting factor.
Troubleshooter
A troubleshooter is a person with specialized skills in identifying and solving issues within an organization. They are often employed to resolve technical or operational problems efficiently.
Turnover Ratio
The turnover ratio is a financial metric that evaluates the efficiency with which a company utilizes its assets to generate revenue. It is an important indicator of operational performance.
Uptime
Uptime refers to the period during which a machine or system is operational and functioning correctly, allowing workers to be productive and maintain business continuity.
Value Driver
Identifying and managing value drivers is crucial for forecasting future cash flows and ensuring the long-term viability of a business.
Waiting Time
The period during which the operators of a machine or the machinery itself are idle or waiting for work, materials, or repairs. This is a key concept in manufacturing, logistics, and service industries.

Accounting Terms Lexicon

Discover comprehensive accounting definitions and practical insights. Empowering students and professionals with clear and concise explanations for a better understanding of financial terms.