Glossary - Agribusiness Management - page 435

net operating income or profi t The amount remaining after operating expenses
are subtracted from gross margin; represents profi t from the primary operations of the
fi rm.
net present value (NPV) A method for evaluating capital investment decisions;
involves calculating the current value of a stream of net cash fl ows to be received over
some specifi ed future period of time using the fi rm's cost of capital as the discount
rate.
net working capital Total current assets less total current liabilities.
net worth See owner equity .
nominal partner A partner in name only; is not active in the partnership and has no invest-

ment.
nonprofi t corporation A corporation that is exempt from certain forms of taxation, and
that generally cannot directly enrich its owners fi nancially.
normal goods A normal good for income elasticity is one for which the quantity demanded
varies directly with real income.
notes payable Short-term loans or liabilities from individuals, banks or other lending
institutions that must be repaid within a year.
objectives See performance objectives .
o n time delivery A metric which measures the performance of a supplier / vendor on their
delivery commitment and to what extent he / she is matching with the lead times
expressed in percentage terms.
on-the-job training Training conducted while the employee is actually performing the
job they were hired to do.
o perating characteristics segmentation A market segmentation approach based
on characteristics such as type of operation (for example, crop versus livestock),
size of operation, production technology used (for example, no-till versus
conventional till), and form of ownership (owner / operator versus cash rent versus crop
share).
operating expenses Those expenses associated with the actual operation of the business;
does not include expenses not directly associated with operations, such as interest
expense, and non-related legal expenses.
operating lease A leasing method that is usually a short-term rental arrangement (i.e.,
hourly, daily, weekly, monthly, etc.) in which the lease charge is calculated on a time-
of-use basis.
operations management One of the four functions of management (along with logistics
management); involves direction and control of the processes used by food and agri-
business fi rms to produce goods and services.
o pinion leaders Well-respected individuals or fi rms who tend to adopt products and serv-
ices more quickly than others; and shape the attitudes of others in a market.
o pportunity cost The income given up by not choosing the next best alternative for the
use of resources; represents the amount that the business forfeits by not choosing a spe-
cifi c alternative course of action.
order point The inventory method that places an order for a lot whenever the quantity on
hand is reduced to a predetermined level known as the order point.
organizational chart A graphic representation of a fi rm's formal organizational structure
which shows reporting relationships and areas of responsibility.
organizational structure The formal assignment of employee responsibilities in a fi rm—
who reports to whom, who has responsibility for what, etc.