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  • 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




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