Consulting Case Interview Glossary,Terminology & Lingo

ABC: Activity-based costing (ABC) aims to provide a dynamic and realistic means of
calculating the true cost of doing business. It precisely allocates direct and
indirect costs to particular products or customer segments.
A/P: A/P is the monies the company owes for goods or services received, but not yet
paid for.
A/R: A/R is the monies due to the company for goods sold or services rendered for
which payment has not yet been received.
Accounts Payable: Accounts Payable (A/P) is the monies the company owes for goods or services
received, but not yet paid for.
Accounts Receivable: Accounts Receivable (A/R)is the monies due to the company for goods sold or
services rendered for which payment has not yet been received.
Activity-Based Costing: Activity-based costing (ABC) aims to provide a dynamic and realistic means of
calculating the true cost of doing business. It precisely allocates direct and
indirect costs to particular products or customer segments.
Assets: Assets are all of a company's physical or intellectual property that has
financial value.
Balanced Scorecard: The balanced scorecard is a strategic management and measurement system that
links strategic objectives to a comprehensive range of key performance
indicators, to provide a balanced view.
Balance Sheet: A financial document showing the assets and liabilities of an organization.
Barriers to Entry: Barriers to entry are those things that make it difficult for a new company to
compete against companies already established in the field. Examples include
such things as patents, trademarks, copyrighted technology, and a dominant
brand.
Benchmarking: Benchmarking is the process of gathering information about other companies in
your industry to compare your performance against and to use to set goals.
Black-Scholes Equation: The Black-Scholes equation is used to determine the value or price of a stock
option. It is a comparatively simple formula, with only a few common
variables, developed by Fisher Black and Myron Scholes in 1973. It makes some
simplifying assumptions about free-market economics, but it has become an
industry standard.
Bottom Line: Bottom Line refers to the bottom line of an Income Statement. The bottom line
shows the Net Income Available To Shareholders. When a company talks about
increasing the bottom line, they mean doing things to either increase the
revenue or decrease expenses so the company's income increases.
Break-Even Point: The break-even point is the point at which income matches expenditures.
Typically, initial expenditures are high. It takes time for the income to
reach the same level. The break-even point can apply to a product, an
investment, or the entire company's operations.
Burnout: Burnout is the term given to the physical or psychological condition induced
in workers by overwork or overexposure to stress in the workplace.
Capital: Capital is the financial investment required to start and/or run a business.
Cash Flow: Cash Flow is the movement of money into and out of a company. When more comes
in than goes out, it is said to be a positive cash flow. A negative cash flow
is when more goes out than comes in.
CGS: CGS (Cost of Goods Sold) are the costs directly related to the purchase or
production of whatever the company sells.
CIP: CIP is the abbreviation for continuous improvement plan, a set of activities
designed to bring gradual, but continual improvement to a process through
constant review. The Shewhart cycle is among the best known.
Company Culture: Company Culture is the term given to the shared values and practices of the
employees. Note that the actual culture may not match the published culture.
Continuous Improvement Plan: A Continuous Improvement Plan is a set of activities designed to bring
gradual, but continual improvement to a process through constant review. The
Shewhart cycle is among the best known.
Cost of Goods Sold: Cost of Goods Sold (CGS) are the costs directly related to the purchase or
production of whatever the company sells.
Cost of Sales: Cost of Sales are the costs directly related to the purchase or production of
whatever the company sells.
Cross Training: Cross training is training someone in another activity that is related to
their current work. The name comes from the fact that you are training them
across a broader spectrum of the organization's work.
Deming Cycle: The Deming Cycle is a set of activities (Plan, Do, Check, Act) designed to
drive continuous improvement. Initially implemented in manufacturing, it has
broad applicability in business. First developed by Walter Shewhart, it is
more commonly called the Deming cycle in Japan where it was popularized by
Edwards Deming.
Discounted Cash Flow: Discounted cash flow is a sophisticated technique used by financial analysts.
Despite its complexity, discounted cash flow analysis is based on a simple
idea - that cash today is worth more than cash promised in the future.
EAP: An EAP is an employee benefit that covers all or part of the cost for
employees to receive counseling, referrals, and advice in dealing with
stressful issues in their lives. These may include substance abuse,
bereavement, marital problems, weight issues, or general wellness issues.

The services are usually provided by a third-party, rather than the
company itself, and the company receives only summary statistical data from
the service provider. Employee's names and services received are kept
confidential.
Earnings Statement: An Earnings Statement is a standard financial document that summarizes a
company's revenue and expenses for a specific period of time, usually one
quarter of a fiscal year and the entire fiscal year.
EBITDA: EBITDA is an abbreviation for Earnings before Interest, Tax, Depreciation and
Amortization. It reports what the company would have earned during the period
if it did not have to pay interest on its debt; didn't have to pay taxes; and
had depreciated the full value of all assets at their acquisition. It is
roughly equivalent to the Operating Income line in the Income Statements.
EI: Emotional intelligence (EI) is one of the most important ideas to hit the
business world in recent years. It is based on the notion that the ability of
managers to understand their own emotions, and those of the people they work
with, is the key to better business performance.
Emotional Intelligence: Emotional intelligence (EI) is one of the most important ideas to hit the
business world in recent years. It is based on the notion that the ability of
managers to understand their own emotions, and those of the people they work
with, is the key to better business performance.
Expenses: Expenses are the costs of doing business that result from generating revenue.
They include parts, salaries, utilities, etc.
FASB: FASB is the abbreviation for the Financial Accounting Standards Board. It was
created in 1973, replacing the Accounting Principles Board and the Committee
on Accounting Procedure of the American Institute of Certified Public
Accountants before it.

The FASB is a private body whose mission is to "establish and improve
standards of financial accounting and reporting for the guidance and education
of the public, including issuers, auditors and users of financial
information." The FASB publishes GAAP.
Financial Accounting Standards Board: The Financial Accounting Standards Board was created in 1973, replacing the
Accounting Principles Board and the Committee on Accounting Procedure of the
American Institute of Certified Public Accountants before it.

The FASB is a private body whose mission is to "establish and improve
standards of financial accounting and reporting for the guidance and education
of the public, including issuers, auditors and users of financial
information." The FASB publishes GAAP.
Fiscal Year: A twelve-month accounting period that usually, but not necessarily, starts on
January 1.
Fixed Assets: Fixed Assets are the non-liquid assets that are required for the company's
day-to-day operations. They include facilities, equipment, and real property.
Fixed Costs: Fixed Costs are expenses that don't change based on production or sales
volumes. They include salaries, rent, insurance, etc.
FY: FY is the abbreviation for fiscal year, a twelve-month accounting period that
usually, but not necessarily, starts on January 1.
GAAP: GAAP is the abbreviation for Generally Accepted Accounting Principles. It
refers to a set of widely accepted accounting standards, set by the FASB, and
used to standardize financial accounting of public companies.
Game Theory: Game theory is based on the premise that no matter what the game, no matter
what the circumstances, there is a strategy that will enable you to succeed.
Generally Accepted Accounting Principles: Generally Accepted Accounting Principles refers to a set of widely accepted
accounting standards, set by the FASB, and used to standardize financial
accounting of public companies.
Goals: Goals are objective, measurable expectations set to measure progress toward
desired results.
Gross Profit: Gross Profit equals sales revenue minus the cost of goods sold.
Gross Revenue: Gross Revenue is money generated by all of a company's operations, before
deductions for expenses.
Hoshin Kanri: Hoshin Kanri is a corporate-wide management approach that combines
strategic management and operational management by linking the achievement of
top management goals with daily management at an operational level. It is
particularly associated with change management.
Income Statement: An Income Statement is a standard financial document that summarizes a
company's revenue and expenses for a specific period of time, usually one
quarter of a fiscal year and the entire fiscal year.
Insider: A company insider is someone who has access to the important information about
a company that affects its stock price or might influence investors decisions.

People who are not employees of the company may be company insiders.
Auditors, outside counsel, brokers and analysts may fit the definition.
Insider Trading: Illegal Insider Trading is the trading in a security (buying or selling a
stock) based on material information that is not available to the general
public.

It is prohibited by the US Securities and Exchange Commission (SEC)
because it is unfair and would destroy the securities markets by destroying
investor confidence.
Intellectual Property: Intellectual Property (IP) is all of a company's patents, trademarks, service
marks, trade names, trade secrets, and copyrights. It is distinguished from
capital property.
IP: Intellectual Property (IP) is all of a company's patents, trademarks, service
marks, trade names, trade secrets, and copyrights. It is distinguished from
capital property.
Job Enlargement: Job Enlargement is the horizontal expansion of a job. It involves the addition
of tasks at the same level of skill and responsibility. It is done to keep
workers from getting bored. It is different than job enrichment.
Job Enrichment: Job Enrichment is the addition to a job of tasks that increase the amount of
employee control or responsibility. It is a vertical expansion of the job as
opposed to the horizontal expansion of a job, which is called job enlargement.
Kaizen (Quality Circles): As much a social system as an industrial process, kaizen is at the
heart of the quality philosophy, and involves the use of quality circles - or
small teams of workers - to analyze and make suggestions for improving their
own work tasks.
Key Performance Indicators: Key Performance Indicators (KPI) are quantifiable measurements, agreed to
beforehand, that reflect the critical success factors (of the company,
department, project).
Key Success Indicators: Key Success Indicators are quantifiable measurements, agreed to beforehand,
that reflect the critical success factors (of the company, department,
project).
KPI: KPI are quantifiable measurements, agreed to beforehand, that reflect the
critical success factors (of the company, department, project).
KSA: KSA is Human Resources (HR) shorthand for Knowledge, Skills and Abilities.
These attributes can be used to describe an individual, a position, or both.
KSI: KSI are quantifiable measurements, agreed to beforehand, that reflect the
critical success factors (of the company, department, project).
Liabilities: Liabilities are all of a company's financial obligations that have a negative
value.
Long Term Assets: Long Term Assets are the non-liquid assets that are required for the company's
day-to-day operations. They include facilities, equipment, and real property.
Market Share: A company's market share is the percentage of any of its markets that it
holds. Companies will often discount their products in order to saturate the
marketplace with them and thereby gain a bigger market share.
Metrics: Metrics are a set of measurements that quantify results. Performance metrics
quantify the units performance. Project metrics tell you whether the project
is meeting its goals. Business metrics define the business' progress in
measurable terms.
NDA: NDA is the abbreviation for non-disclosure agreement. An NDA is a legal
contract that allows a company to share its IP with others, whose input it
needs, without unduly jeopardizing that information.
Net Income: Net Income is total revenue minus total expense, what's left of the monies
received after all debts have been paid, the bottom line. If Net Income is
positive it is also called Net Profit. A negative Net Income is a Net Loss.
Non-disclosure Agreement: A Non-disclosure Agreement is a legal contract that allows a company to share
its intellectual property (IP) with others, whose input it needs, without
unduly jeopardizing that information.
Objective: A business objective is something the business is aiming toward or a strategic
position it is working to attain. Usually it is a step in the strategy.
Objectives are similar to goals, but often have success/failure rather than
quantifiable metrics.
OD: Organization Development (OD) is an evolving field of consulting practice that
is dedicated to understanding and positively impacting the processes of human
systems (formal and informal groups, teams, organizations, and individual
leaders) in order to increase their effectiveness, health and overall success.
OD practitioners leverage the best of a variety of disciplines, including
applied behavioral science. OD focuses on achieving results through people.
Opportunities: A company's opportunities are the gains it has the potential to realize. It
may have the potential to gain market share, the ability to raise cash by
divesting of less-profitable units, etc. Opportunities are also part of a SWOT
analysis, the abbreviation for strengths, weaknesses, opportunities, and
threats.
Organization Development: Organization Development (OD) is an evolving field of consulting practice that
is dedicated to understanding and positively impacting the processes of human
systems (formal and informal groups, teams, organizations, and individual
leaders) in order to increase their effectiveness, health and overall success.
OD practitioners leverage the best of a variety of disciplines, including
applied behavioral science. OD focuses on achieving results through people.
Outsourcing: Outsourcing involves an organization passing the provision of a service or the
execution of a task previously undertaken in-house to a third party to perform
on its behalf.
Paradigm: A paradigm is a pattern or example. In business it is a framework of behaviors
or set of rules action governing people's actions and assumptions.
PDCA: PDCA is a cycle of activities (Plan, Do, Check, Act) designed to drive
continuous improvement. Initially implemented in manufacturing, it has broad
applicability in business. First developed by Walter Shewhart, it was
popularized by Edwards Deming.
Plan Do Check Act: Plan, Do, Check, Act is a cycle of activities designed to drive continuous
improvement. Initially implemented in manufacturing, it has broad
applicability in business. First developed by Walter Shewhart, it was
popularized by Edwards Deming.
Profit and Loss Statement: A Profit and Loss Statement is a standard financial document that summarizes a
company's revenue and expenses for a specific period of time, usually one
quarter of a fiscal year and the entire fiscal year.
Relationship Marketing: Relationship marketing refers to the benefits that ongoing relationships with
key customers can bring to an organization.
R & D: R & D is the abbreviation for Research and Development. This refers to the
line on an income statement showing the amount of money a company has
re-invested during the period to find and develop new products.
Request for Proposal: A Request for Proposal is a document issued when an organization wants to buy
something and chooses to make the specifications available to many other
companies so they can submit competitive bids.
Request for Quotation: A Request for Quotation is a document issued when an organization wants to buy
something and chooses to make the specifications available to many other
companies so they can submit competitive bids.
Research and Development: Research and Development refers to the line on an income statement showing the
amount of money a company has re-invested during the period to find and
develop new products.
Restricted Stock: Units of stock with restrictions on when they can be sold. Usually issued as
partial compensation for employees and directors. The restriction usually
lifts in 3 to 5 years when the stock vests.
Return on Assets: Return on Assets (abbreviated ROA) is a measure of a company's profitability.
It is calculated as earnings divided total average assets and is expressed as
a percentage.
Return on Investment: Return on Investment (abbreviated ROI) is a measure of a company's ability to
use its assets to generate additional value for shareholders. It is calculated
as Net Profit divided by Net Worth, and expressed as a percentage.
Revenue: Revenue is money generated by a company's operations, before deductions for
expenses.
RFP: RFP is the abbreviation for Request for Proposal. An RFP is issued when an
organization wants to buy something and chooses to make the specifications
available to many other companies so they can submit competitive bids.
RFQ: RFQ is the abbreviation for Request for Quotation. An RFQ is issued when an
organization wants to buy something and chooses to make the specifications
available to many other companies so they can submit competitive bids.
ROA: ROA is the abbreviation for Return on Assets. It is a measure of a company's
profitability and is calculated as earnings divided total average assets. ROA
is expressed as a percentage.
ROI: ROI is the abbreviation for Return on Investment. It is a measure of a
company's ability to use its assets to generate additional value for
shareholders. It is calculated as Net Profit divided by Net Worth, and
expressed as a percentage.
Sales Revenue: Sales Revenue is money generated by a company's sales operations, before
deductions for expenses.
Scenario Planning: Scenario planning involves testing business strategies against a series of
alternative futures.
Shewhart Cycle: Named for Walter Shewhart who discussed the concept in his 1939 book,
"Statistical Method From the Viewpoint of Quality Control", it is the
continuous improvement cycle of Plan, Do, Check, Act.
SME: Small and Medium-sized Enterprises or SMEs are companies whose headcount or
turnover falls below certain limits.

The abbreviation SME occurs commonly in the EU and in international
organizations, such as the World Bank, the United Nations and the WTO, but
less so in the US. Companies with headcounts less than 100 are typically
labeled "Small" while organizations with head counts less than 500 are
considered "Medium" in the US.
Strategic Inflection Point: Strategic inflection points occur when a company's competitive position goes
through a transition. It is the point at which the organization must alter the
path it is on - adapting itself to the new situation - or risk going into
decline. It is concerned with how companies recognize and adapt to "paradigm
changes."
Strategy: A Strategy is the plan you develop to help you achieve your vision. It
requires an evaluation of your organization internally, but also of the
external and environmental factors, especially competitors, that can impact
you.
Strengths: A company's strengths are the things it does well. It may have a dominant
market share or have a low turnover rate, etc. Strengths are also part of a
SWOT analysis, the abbreviation for strengths, weaknesses, opportunities, and
threats.
Strike Price: The Strike Price is the price at which the holder of a stock option may
purchase the stock.

If the strike price is below the price at which the stock is trading on
the open market, the option holder may be able to make a profit. If the stock
price on the open market is below the strike price, the options are said to be
"underwater". It would make no sense to exercise an "underwater" option
because that would mean buying the stock through the stock option at a higher
price than you would pay on the open market.
SWOT: SWOT is the abbreviation for strengths, weaknesses, opportunities, and
threats. These four factors provide a framework which an organization can use
to conduct a structured analysis of its operations.
Tactics: Tactics are the specific actions, sequences of actions, and schedules you use
to fulfill your strategy. If you have more than one strategy you will have
different tactics for each.
Theory X: Douglas McGreagor's Theory X states that some people have an inherent dislike
for work and will avoid it whenever. These people need to be controlled and
coerced by their managers to achieve production. See Theory Y for the opposite.
Theory Y: Douglas McGreagor's Theory Y states that some people see work as natural will
be self-directing if they are committed to the objectives. The manager's role
with these people is to help them achieve their potential. See Theory X for
the opposite.
Threats: A company's threats are the dangers it faces, either from within or from
outside. Threats can be things like a new low-cost competitor, possible new
government regulations, etc. Threats are also part of a SWOT analysis, the
abbreviation for strengths, weaknesses, opportunities, and threats.
Top Line: Top Line refers to the top line of an Income Statement. The top line shows the
Total Sales Revenue. When a company goal is to increase the top line, it means
to concentrate on increasing gross sales.
Variable Costs: Variable Costs are expenses that vary based on production volumes. They
include material, labor, production utilities, etc.
Vest / Vesting: To give someone control over their stock or stock options.

When employees are given stock options or restricted stock, they often
do not gain control over the stock or options for a period of time. This
period is known as the vesting period and is usually 3 to 5 years. During the
vesting period the employee cannot sell or transfer the stock or options.
Vision: Your organization's Vision is the over-riding principle that guides the
organization. It defines what you want the organization to be. The vision is
often the dream of the founder or leader.
Weaknesses: A company's weaknesses are the things it does not do well or that others do
better. It may have a high turnover, be more concerned about processes than
progress, etc. Weaknesses are also part of a SWOT analysis, the abbreviation
for strengths, weaknesses, opportunities, and threats.