Glossary - Agribusiness Management - page 421

commercial farms A category of farms that are family farms with income over $250,000
or nonfamily farms.
commercial fi nance companies Those fi nance companies or specialized lenders that
focus on business and commercial loans.
commission The fee paid to a salesperson or other individual for providing a service;
typically a percentage of the total amount of business transacted.
c ommon-size analysis A fi nancial analysis technique where the fi rm's fi nancial state-
ments are expressed as percentages of some key base fi gure such as total sales or total
assets, and then the resulting common size statements are used to make comparisons
over time, or against peer fi rm data.
common stock A specifi c form of equity investment in a corporation that carries with it
the right (and obligation) to share in any profi ts or losses incurred by the business.
communication The successful exchange of information or ideas between two or more

individuals.
compensating balance A specifi ed amount of money that must be retained in a bank
account while a loan is outstanding.
compensation The total amount of salary, commissions, bonuses, benefi ts, and perquisites
that are given to an employee in exchange for work done.
c ompetitive advantage The set of fi rm competencies that are important to customers
where the fi rm has a clear and distinct advantage over the competition.
competitive pricing A simple pricing method, based primarily on competitors' prices
where prices are set at the “going rate.”
compounding A method of calculating interest in which interest earned periodically is
added to the principal and becomes part of the base on which future interest is earned.
conformance to specifi cation A term used in quality management to confi rm the adher-
ence to specifi cation of a produce or service.
consensus forecast A forecast (usually generated by the Delphi method) where agreement
is reached by a group on a set of future outcomes, scenarios, or indicators.
contingency planning The development of alternative plans in case the assumptions made
in the planning process do not materialize.
continuous inventory In inventory management, the constant monitoring of stock on
hand.
continuous production A total production process that involves the fl ow of inputs in an
uninterrupted way through a standardized system to produce outputs that are basically
identical.
contribution margin Gross margin less variable costs.
contribution to overhead (CTO) The portion of each unit (dollar) of sales that remains
after variable costs are covered and that can be applied toward covering fi xed costs.
contribution to profi t (CTP) The portion of each unit (dollar) of sales that remains after
variable costs and all fi xed costs are covered; CTO at sales volumes greater than the
fi rm's breakeven point.
control The process of monitoring performance, as compared with pre-established stand-
ards, for the purpose of making adjustments to ensure that goals will be accomplished.
controlling One of four tasks of management; represents the monitoring and evaluation of
activities, and assessment of whether the goals and performance objectives developed
within the planning function are achieved.
cooperative A distinctive form of corporation that is organized to serve the needs of its
member-patrons rather than to make a profi t for investors.