Glossary Of Automotive Terminology
Accounts payable - A liability to a creditor, carried on open account, usually for purchases of goods and services.
Accounts receivable - A claim against a debtor, carried on open account, usually limited to debts due from the sale of goods and services.
Accruals Accounts - on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting.
Advertising - To give information to the public about; announce publicly in a newspaper, on radio or television, etc
Aftermarket - The market for replacement parts, service, accessories, and equipment for the care or enhancement of the original product, esp. an automobile, after its sale to the consumer
Assets - Items of ownership convertible into cash; total resources of a person or business, as cash, notes and accounts receivable, securities, inventories, goodwill, fixtures, machinery, or real estate
Average repair order (ARO) - Gross sales divided by the number of invoices in a given period, expressed in dollars
Balance sheet - A statement of the financial position of a business on a specified date.
Break even - Having income exactly equal to expenditure, thus showing neither profit nor loss
Capital Assets - remaining after deduction of liabilities; the net worth of a business.
Cash flow - The sum of the after-tax profit of a business plus depreciation and other non-cash charges: used as an indication of internal funds available for purchase of tools and equipment, etc.
Corporations - A body that is granted a charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of its members.
Cost of goods - The total price paid for products sold plus the cost of labor and overhead associated with the sale
Current liability - A debt due within a year. Current liabilities include accounts payable, short-term loans from financial institutions and expenses incurred but not paid.
Customer service index (CSI) - General customer survey used to evaluate company operations, may also be tied with salary bonus
Dealership - A sales agency, franchise or distributor having such authorization to sell specified vehicles in a particular area
Demographics - The statistical data of a population showing average age, income, education, etc.
Depreciation - Decrease in value due to wear and tear, decay, decline in price, etc.
Direct costs - Those costs that can be identified specifically with a particular job or that can be directly assigned to such activities
Distribution to owner - Money paid to owners as a cash return on their investment in the company
Door rate - Posted hourly labor rate used to compute estimates and for tracking purposes
Economy - The management of the resources of a community, country, etc., particularly with a view to its productivity.
Effective labor rate - The actual dollar per hour labor income after calculating productivity
Efficiency - The actual time a technician takes to complete a job as compared to book time or sold time
Entrepreneur - A person who organizes and manages any enterprise or a business, usually with considerable initiative and risk.
Equity - The monetary value of a property or business beyond any amounts owed on it in mortgages, claims, liens, etc.
Expense - The general costs of overhead and administration associated with running a business.
Flat rate - The use of a published labor guide to set labor times (charged to the customer) to complete a particular job
Franchise - The right or license granted by a company to an individual or group to market its products or services in a specific territory.
Gross profit - Total receipts less the cost of goods or production but before the deduction of such other costs as rent or salaries.
Income tax - A tax levied on incomes such as an annual government tax on personal incomes.
Independent repair shop - Private auto repair and service facility with no legal ties to carmakers, franchises or other corporations
Indirect costs - Indirect costs represent the expenses of doing business that are not readily identified with a particular activity, but are necessary for the general operation of the company
Interest - A sum paid or charged for the use of money or for borrowing money.
Inventory - The items and parts represented on a list stating a company’s stock of goods
Inventory turns - The number of times that a companies inventory cycles or turns over per year.
Labor cost - That part of the cost of goods and services attributable to wages, especially for direct labor.
Labor mix - The ratio between labor sold and parts sold
Labor rate - Posted hourly labor rate used to compute estimates and for tracking purposes
Liability - Moneys owed; debts or financial obligations
Loans - A sum of money lent at interest
Long term debt - Loans and obligations with maturity of longer than one year; usually accompanied by interest payments.
Mark up - To set the selling price of a part by adding to the seller's cost an amount to cover expenses and profit
Marketing - The total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling
Menu pricing - A set bundled price, including parts and labor
Mortgage - A conveyance of an interest in property as security for the repayment of money borrowed.
Net income - The excess of revenues and gains of a business over expenses and losses during a given period of time.
Net worth - The amount by which a company or individual's assets exceed their liabilities.
Operating income - The amount left over after subtracting the company's operating expenses from the gross profit
Partnerships - A legal contract entered into by two or more persons in which each agrees to furnish a part of the capital and labor for a business enterprise, and by which each shares a fixed proportion of profits and losses.
Parts matrix - A part pricing system that allows higher margins for lower priced parts and lower margins for higher priced parts
Productivity - The relationship between hours sold versus the technician's available billable hours.
Profit and loss Statement - Also know as an income statement. A financial statement that indicates income and expenses and shows weather a company made or lost money for a given period.
Profit Margin - Net profit margin of a business, which is calculated by deducting operating expenses and cost of goods sold and dividing the result by net sales.
Repair mix - The ratio between repair work and preventive maintenance work
Retained earnings - The accumulated net income retained for reinvestment in a business, rather than being paid out in dividends to stockholders.
Service Consultant - A company's representative responsible for customer’s needs and coordinating workflow, up selling jobs and maintaining productivity
Short term debt - Debt due to be paid off at a date less than one year in the future.
Sole proprietorship - A type of business entity which legally has no separate existence from its owner.
Total Quality Management (TQM) - TQM is a set of practices geared to ensure the organization consistently meets or exceeds customer requirements by placing strong focus on process measurement as means of continuous improvement.
Up sell - A sales technique to sell additional items or services