HBR 20-Minute Manager Boxed Set (10 Books) (HBR 20-Minute Manager Series)

Key Terms

109

(P&L), a statement of operations, and a statement of

earnings.

Indirect costs. Costs not directly attributable to

the manufacture of a product or the provision of a

service.

Interest coverage. An indicator of a company’s margin

of safety on its interest costs—specifi cally, how many

times over the company could make its interest pay-

ments out of current operating profi ts. To calculate

interest coverage, divide EBIT by interest expense.

Internal rate of return (IRR). The rate at which the net

present value (NPV) of an investment equals zero.

Inventory. Material that will eventually be fabricated

and/or sold. Examples include the merchandise in a

shop, fi nished goods in a warehouse, work in prog-

ress, and raw materials.

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