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Paradigm shift

A term used to define the process of change in patterns of thought or behavior.


Pareto chart

A bar graph used to rank in order of importance information such as causes or reasons for specific problems so that measures for process improvement can be established.



A personal view of the world based only on ones own perspectives and values. This view does not recognize or respect other perspectives or ways of living and working.



A cultural perspective that is contingency-oriented and uses different evaluative standards based on relationships and situations.



An alliance between two or more individuals who mutually agree to share in the profits and losses of a business venture.


Penetration pricing

A market-based approach whereby a company will set the price for a product or service significantly lower than comparable goods and services being sold by competitors in an effort to make their products more attractive to consumers.


Penny stock

Defined by the Securities Exchange Commission (SEC) as shares with a trade value of less than $5.00.


Per capita income

The average income per person in a particular population.


Percentile rank

A means of indicating the position of a test score in a group of 100 scores. Typically described as the percentage of scores in a distribution that a specific score is equal to or greater than.


Performance budgeting

A budgeting system predicated on the relationship between inputs and outputs and aligning goals with key management activities.


Periodic budgeting

A budget developed for the purpose of covering a specific period of time (i.e., annual budget).



A term that simply stated means indefinitely. In finance terms, it is the number of years in which the simple interest of any sum becomes equal to the principal or annuity payable indefinitely.


Petty cash

Refers to the small quantity of cash typically kept on hand by a company to cover incidental expenses.


Phantom income

Income that is reportable as taxable income but does not generate cash flow for the investor.


Physical assets

A term used to describe a companys or individuals tangible assets such as property, equipment, furnishings, inventory and supplies.



A written statement that that reflects the employers standards and objectives relating to various employee activities and employment-related matters.



An itemized list of investments such as stocks, bonds or mutual funds, all owned by the same individual or company.


Positioning statement

A statement defining a companys target market, brand reference, need fulfillment and needed support to communicate what the company stands for.


Power distance

A cultural value dimension developed by Hofstede that focuses on the degree to which power differences are accepted in a culture.



An individual who practices a learned profession.


Predictive validity

Used in the test validation process to measure the relationship between test scores and actual job performance.

Preferred stock

Capital stock having priority over a companys common stock in the distribution of dividends or assets.


Premium pricing

High pricing by a company because of the perceived superiority of a product or service or the wish to intimate superior quality.


Prepaid interest

The amount of interest paid on a loan at closing covering the period from the time the bank funds the loan to the date the first payment is due.


Price earnings ratio (P/E ratio)

Used as a guide by investors for buying and selling stock, it is the most common measure of the actual cost of a stock. The P/E ratio is equal to a stocks market capitalization divided by its after-tax gains over a 12-month period.


Price escalation clause

A contract provision of calling for an increase in price should an increase in certain types of costs occur.


Prime rate

The interest rate charged by banks and other lending institutions to their most creditworthy customers.



The total amount of money owed as a debt, used as the basis for calculating interest.

Principal shareholders

Shareholders who own 10% or more of company shares.



A term used in statistics that depicts the likelihood of some event occurring.


Process reengineering

The process of improving business practices or methods by creating and implementing new processes or making changes to existing processes.

Procurement budget

A budget that displays the timing, quantities and projected costs for each type of raw material required to meet inventory and production needs.


Producer price index (PPI)

An inflation indicator issued by the U.S. Bureau of Labor Statistics used to assess the economys wholesale price levels.


Product differentiation

A marketing strategy that attempts to make clear distinctions between comparable products serving the same market segment through the use of innovative design, packaging, branding, positioning, etc.


Product life cycle

A marketing concept in which company products or brands follow a series of phases: introduction, growth, maturity and decline.


Professional Employer Organization (PEO)

An organization that enters into a join-employment relationship with an employer by leasing employees to the employer, allowing the PEO to share and manage many employer-related responsibilities and liabilities. Employers outsource their HR functions such as employee benefits, compensation and payroll administration, workers compensation, and employment taxes.


Profit margin

Company earnings expressed as a percentage of revenue (also referred to as margin).


Profit and loss statement

A financial document summarizing company revenue and expenses during a specified period of time.



The return received on a business enterprise after all of its operating expenses and financial obligations have been met.



A common corporate objective that focuses on a companys or industrys efficiency at generating income.


Profit and loss statement (P & L)

An official financial statement prepared on either a quarterly or annual basis showing earnings, expenses and net profit. A companys net profit is determined from this financial report by subtracting total expenses from total revenue.


Profit budget

A set of estimated financial statements and schedules for the following year.


Pro forma

The term pro forma comes from the Latin phrase meaning as a matter of form. The term is very broad, and its meaning depends on the context in which it is being used. Basically, it is a term used to describe the presentation of data, usually financial statements, where the data reflect information as if the state of the world were different from that which is, in fact, the case.


Program budgeting

A budgeting method that deals mainly with broad planning and the associated costs of functions, activities, programs and services.



A prediction or an estimate of a future occurrence, based on current data or trends.


Project budgeting

A budget that is developed around a specific type of project rather than time period.


Promissory note

A legally binding written contract between a borrower and a lender in which the borrower agrees to pay back money to a lender according to specified terms.


Proprietary information

Information associated with company products, business or activities, including such items as financial data; trade secrets; product research and development; product designs; marketing plans or techniques; computer programs; processes; and know-how that has been clearly identified and communicated by the company as proprietary, a trade secret or confidential.


Proprietary Technology

Technology such as software applications that is unique and legally owned by a single enterprise or individual.


Proxy statement

A written statement containing information issues that to be discussed and voted on at a shareholder meeting.


Public domain

Materials such as literary works, music, films, photographs, art, etc. that are no longer covered under copyright law and that can be published without obtaining permission or paying a fee.


Public offering

The introduction of new securities to the general public by means of underwriting.


Publicly held corporation

A term used to describe an organization whose stock is held by the public.


Purchasing power

The measure of the value of a particular currency expressed in terms of the amount of goods or services that one unit of currency can purchase.


Put option

An option contract that gives the holder the right to sell an asset for a specified price on or before a specified expiration date.


Pyramid selling/schemes

A strategy that involves the sale of goods in bulk to a distributor who then divides them and sells them to a sub-distributors at a profit, who do likewise to others, and so on. Considered an illegal selling strategy in many states.

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