Business principles and practice

Financial Reports

• The three standard financial reports are the income statement, balance sheet, and statement of cash flows.

Income Statement

• An income statement shows revenue, expenses, and net income over a defined period.

Balance Sheet Equation

• Assets are equal to liabilities plus shareholder equity.

Balance Sheet

• A balance sheet shows a summary of an organization's investing and financing.

Cash Flow Statement

• A cash flow statement shows how cash inflows and outflows affect an organization.

Cash Flow Statement Elements

• The three elements depicted in a cash flow statement are net operating cash flow, net investing cash flow, and financing cash flow.

Ratios for Making Money

• Return on assets = net income/total assets
• Return on equity = net income/shareholder equity

Measuring Profit Margins

• Gross profit margin = (revenue - cost of goods sold – general and administrative costs)/revenue
• Operating margin = EBITA (earnings before interest, taxes, and amortization)/revenue
• Net profit margin = net income/revenue

Ratios Demonstrating Firm Earning

• Return on assets = net income/total assets
• Return on equity = net income/shareholder equity

Earnings-Related Ratios

• Earnings per share = net income/total shares
• Price to earnings = price per share/earnings per share

Current Ratio

• The current ratio is a measure of a company's ability to cover short-term obligations.
• Current ratio = current assets/current liabilities

Quick Ratio

• The quick ratio measures an organization's ability to cover current liabilities with current assets that can be quickly converted to cash.
• Quick ratio = (cash + securities + accounts receivable)/current liabilities

Debt to Equity Ratio

• The debt to equity ratio is a measure of a company's long-term financial health.
• Debt to equity ratio = total liabilities/shareholder equity

Limitations of Financial Statement Analysis

• Financial statement analysis does not directly consider changes in market conditions.
• It does not account for the fact that all organizations operate differently and target different markets.
• It requires that financial reports must be accurate for financial ratios to have meaning.

Benefit of Zero-Based Budgeting

• Zero-based budgeting may force managers to consider alternative ways of getting the job done.

Practical Budget Development

• A combination of top-down and bottom-up processes is generally the most practical approach to budget development.

Setting Budget Line Items

• Look at each budget expense as an investment and calculate the expected return on that investment.

Bottom-Up Budgets

• Lower-level managers may more readily accept a bottom-up budget because they had a role in developing it.

Standard Development Involvement

• A broad group of stakeholders and interested parties should be involved in developing a standard, working collaboratively.

Largest Developer of International Standards

• ISO, the International Organization for Standardization, is the world's largest developer of international standards.

Pillars of ISO Standards

• Equal footing of members
• Market need
• Consensus
• Voluntary participation and application
• Worldwide applicability

U.S. Standardization System Administrator

• The American National Standards Institute (ANSI) is the administrator and coordinator of the U.S. private sector voluntary standardization system.

ANSI Standards Driver

• Standards users drive the ANSI standards development process.

ISO's Management Systems Standards

• The operating principle of ISO's management systems standards is the Plan-Do-Check-Act cycle.

Job Requirements Analysis

• The hiring manager, other team members, and organizational leaders should be involved in developing a job requirements analysis.

Recruiting Good Candidates

• Internal recommendations are the best way to recruit a good candidate for a job.

Company Valueable Resources

• A company's top two most valuable resources include employees and corporate knowledge.

Basic Functions of Management

• Planning, organizing, directing, coordinating, and controlling are the five basic functions of management.

Peter Drucker's Crucial Question

• According to Peter Drucker, the most crucial question in defining business purpose and mission is: Who is the customer?

Spare Parts Budget Allocation

• About 5 percent of the capital cost of equipment for a location should be allocated each year for spare parts.

Strategic Plan Timeline

• A strategic plan should look out into the future for three to five years.

Span of Control

• A single person can supervise only a limited number of staff members effectively; generally, up to 10.

Unity of Command

• An individual should report to only one supervisor.

Security Professional Reporting

• An organization's most senior security professional should report directly to senior or executive management.

McGregor's Theory X

• McGregor's Theory X says that the average worker is lazy and lacks ambition and must be pushed by a hard-driving, authoritarian manager.

McGregor's Theory Y

• McGregor's Theory Y says that workers will seek greater responsibility in the right environment and can exercise self-direction, motivation, ingenuity, and creativity.

Herzberg's Behavioral Theory

• Herzberg's behavioral theory says that good job performance is a function of hygiene or maintenance factors, like job security and working conditions, as well as satisfiers or motivators, such as recognition and advancement.

Argyris Behavioral Theory

• The Argyris behavioral theory says that traditional organizational principles and structures are incompatible with the mental health of employees, and they cause workers to become apathetic, self-protective, or combative.

Warren Bennis's Behavioral Theory

• Warren Bennis's behavioral theory says organizations can be adaptive, problem-solving, and innovative and will be based on free and full communication, consensus, influence based on competence, and a climate that allows for expression of emotions.

Big Five Model of Personality

• The components of the Big Five Model of Personality are surgency (leadership and extroversion), agreeableness, adjustment, conscientiousness, and openness to experience.

Security Officer Performance

• Vigilant performance describes the expectation of competent performance by a security officer.

Officer Fatigue Accidents

• Officer accidents caused by fatigue peak at 0300 and 1500 (3:00 a.m. and 3:00 p.m.).

Officer Vigilance Maintenance

• Systematically rotate duties, at two- to four-hour intervals, between fixed post and roving patrol assignments to maintain officer vigilance.

Types of Learning for Officer Training

• Cognitive (mental), affective (emotional), and psychomotor (physical) are the three types of learning for officer training.

Officer's Personal Development Elements

• Education, training, and guided experience are the three elements of an officer's personal development.

Benefits of Officer Training

• Officer training provides improved job performance, ease of supervision, procedure review, staff motivation, reduced turnover, and legal protection.

Immediate Training Options

• Off-the-shelf programs and contracted trainers are the best options for immediate officer training.

Knowles's Principles of Andragogy

• Adult learning assumes adults are self-directed and will take responsibility for their own learning needs.

Participant Evaluations

• Participant evaluations do not measure actual learning; instead, they validate what learners think they learned.

Case Study Training

• The case study method of training is most effective when students work together in groups and actively have discussions.

Effective Training Methodology

• Mentoring works best as a training methodology in most security environments.

Overcoming Training Budget Limits

• Six ways to overcome limiting training budgets are to use off-the-shelf programs, outsource training to a community college or technical institution, look for grant funding, join professional organizations such as ASIS, share instructional materials, and use distance learning.

Frog Syndrome

• Managers believe they can train all their subordinates personally.
• They jump into the project and then jump out when overwhelmed.

Roles of Security Officers

• Security officers can play the roles of management representative, intelligence agent, enforcement/compliance agent, legal consultant, and physical security/crime prevention specialist.

Particularized Training for Officers

• Outsourcing is the best way to get many different types of particularized training for small groups of officers.

Largest Item in the Budget

• Personnel costs are generally the largest item in the operating budget of a security department.

Scope of Security Service Contract

• The scope of work should specify security tasks, days and hours of performance, and the total number of hours to be worked.

Compensation Policy for Contract Officers

• Security managers, not purchasing staff, set the compensation policy in the contracting company for contract security officers.

Evaluating Security Service Bids

• Complying with the submission deadline is the first criterion in evaluating bids for security services.

Supervisor for Contract Personnel

• A contracting organization should hire its own supervisor for contract personnel when those personnel work more than 400 hours per week.

Approaches to Loss Event Criticality

• Known frequency rate, nominal numerical probability, and scatter plots are three alternative approaches to calculating loss event criticality other than the cost of loss formula.

Fidelity Bond

• A fidelity bond is insurance that covers losses created by dishonest employees.

Security Officer Staffing

• Assuming officers work 40 hours/week, and each post is staffed 24/7, 4.2 officers are required for each post.
• 4.5 officers are required when holidays, vacation, and sick time are included in the calculation.