AP®︎ Business with Personal Finance: Topic 4.2 Flashcards
Master key terms and definitions for Topic 4.2 of AP Business with Personal Finance – Evaluating Performance Using KPIs to help you prep for quizzes and the AP exam.
Key Performance Indicator (KPI)
A data point selected to measure business performance, progress toward goals, or a strategy’s effectiveness
A data point selected to measure business performance, progress toward goals, or a strategy’s effectiveness
Amount earned from selling goods or services during a period; revenue = units sold × selling price per unit
Direct cost associated with the goods or services sold during a period
Revenue remaining after COGS is deducted; gross profit = revenue − COGS.
Percentage of revenue remaining after COGS; gross profit margin = gross profit ÷ revenue × 100
Costs of running the business that are not classified as COGS, such as rent, marketing, utilities, and administrative salaries
Profit from normal operations; operating profit = revenue − COGS − operating expenses, or gross profit − operating expenses
Percentage of revenue remaining as operating profit; operating profit margin = operating profit ÷ revenue × 100
Cash moving into and out of a business during a period, which differs from accounting profit
The difference between cash inflows and outflows; net cash flow = cash inflows − cash outflows
Average cost of gaining a new customer; CAC = customer-acquisition spending ÷ new customers acquired for the same period
Estimated value generated over a customer relationship; basic revenue-based CLV = average purchase amount × purchases per period × customer lifespan
A summary of customers’ evaluations of a product, service, or interaction, reported on a defined scale or as a percentage
Ability to keep existing customers; retention rate = (ending customers − new customers acquired) ÷ starting customers × 100
The total units sold, sales transactions, or sales revenue during a stated period, with the unit identified
A business’s portion of sales in a defined market; market share = business sales ÷ total market sales × 100
Average relevant cost for each unit; per-unit cost = total relevant cost ÷ number of units
Cost of delivering orders, reported as a total or as average delivery cost = total delivery cost ÷ number of deliveries
Percentage of orders completed without error; order accuracy rate = accurate orders ÷ total orders × 100
Percentage of deliveries arriving by the consistently defined promised time; rate = on-time deliveries ÷ total deliveries × 100
A reference point used to compare KPI data with a standard and assess performance
A performance standard based on the same business’s data from an earlier month, quarter, year, or other period
A performance standard based on results typical of comparable businesses or the relevant industry
The direct difference between two percentages; percentage-point change = new percentage − old percentage
