Par value The stated face value of a share shown on the certificate. It rarely has any relationship to the traded or book value of the stock. Non par value stock (NPV) is stock for which there is no stated face value.

Pareto’s law The law of the vital few and the trivial many; e.g., 20% of items account for 80% of sales and profits. Based on this, key inventory items can be isolated for more careful control.

Pari passu Side by side at an equal rate or in equal installments or, in terms of security, ranking equally.

Partnership A legal business relationship of two or more people or companies who share responsibilities, resources, profits, and liabilities. An agreement in writing is essential, detailing the nature of the relationship. Each province has a Partnership Act which governs this type of business structure.

Patent The legal right to ownership of an invention issued, in Canada, under the Patent Act. By granting this right to inventors, society hopes to encourage invention and innovation, and thus to benefit from increased economic efficiency and growth. The benefit to the inventor is that, for a limited period, the inventor can charge a royalty for the use and application of the invention or sell such rights to another person.

Payables Trade or other liabilities that are due. One of the basic records kept by a bookkeeper is accounts payable.

Penetration pricing Deliberately setting the selling price of a new item low, so that it will be able to enter a market dominated by better known brands.

Peripherals Devices such as printers or disk drives that are added to the basic hardware (CPU and monitor) to perform specific functions. The computer’s input and output devices.

Perpetual inventory control A method of keeping up-to-date records on all inventory items by recording every time an item enters or leaves inventory.

Personnel management All that’s involved in developing and keeping productive staff. Among other things, this includes: knowing what your organization structure is so that job descriptions show people how they fit in; knowing who to look for, where to find them, knowing how to select, train, and evaluate staff; knowing how to keep staff satisfied (pay scales, benefits, working conditions, etc.) and motivated (challenging jobs, increasing responsibility, personal relations, etc.); and, finally, keeping clear records to satisfy both internal management needs and government filing requirements.

Physical inventory control (periodic) A physical count of all stocks to record what is on hand.

Piecework Money paid based on the quantity of work produced, rather than by the hours worked.

Port charges Charges for unloading or storing goods and for dock space before loading on a ship.

Posting The act of making an entry in an account. Literally, post means to give a position to something, so when you post figures in a ledger, you are assigning them their right position in the firm’s account books.

Preferred creditor A creditor who must be paid after secured creditors and before unsecured creditors in the event of a business failure under the Bankruptcy and Insolvency Act. Usually certain provincial and federal government departments.

Price fixing Collusion among competitive businesses to keep prices up. Illegal.

Price skimming Charging a high price for a new product for which there is no competition, to take advantage of a demand which cannot be met elsewhere.

Price spread The difference between selling price and cost of production.

Pricing Setting the selling price. One of the most difficult jobs in business is selecting the right price. You have to consider how much profit you need, what your competition is charging, and how much your customers are willing to pay.

Prime rate The interest charged by chartered banks on corporate loans. Ultimately determined through the Bank of Canada.

Principal Property or capital assets as opposed to income; also, one who is directly concerned in a business enterprise.

Product differentiation Details of design, promotion, and pricing planned to distinguish competing products in the minds of consumers.

Product life cycle The curve of profit in relation to costs and sales described by every product in the time between entering and leaving the market.

Production oriented The focus is on what can be produced rather than on what can be sold.

Productivity The output of goods and services from the effective use of various inputs, such as skilled workers, capital equipment, managerial know-how, technological innovation, and entrepreneurial activity.

Pro forma A projection or estimate of what may result in the future from actions in, the present. A pro forma financial statement is one that shows how the actual operations of the business will turn out if certain assumptions are realized.

Profit The excess of the selling price over all costs and expenses incurred in making the sale. Gross profit is the profit before corporate income taxes. Net profit is the final profit of the firm after all deductions have been made.

Profit-and-loss statement Listing of revenue and expenses showing the profit (or loss) for a certain period of time. Also called an income statement.

Profit margin The difference between your selling price and your costs. Many factors affect profit margin both inside and outside the business.

Promotion All messages about a business that are communicated to potential customers. Promotion tools or vehicles include advertising, personal selling, sales promotions, and publicity (public relations).

Promotion message What you tell people about your business or products and how it can satisfy their needs.

Promotion mix The combination of types of advertising, advertising media, and means of selling chosen for a particular product.

Proprietorship Sole ownership of a business. Personal and business assets and liabilities are not considered separate legal entities. Also called sole proprietorship.

Public relations The various activities of an organization that are undertaken to make the organization known to its public in a favourable fashion.

Publicity Any news or activity that makes a product or service and the company making or selling it generally known. Usually free of cost, or minimal cost.

Purchasing and inventory control The systems involved in knowing what to buy, when and how much to buy; and controlling stocks once they are received. The overall goal is to provide the right goods at minimum cost.

Purchasing system The policies and procedures for getting the necessary goods into the business. Includes deciding on the kind of goods and their assortment, choosing suppliers, processing and follow-up on orders (when to order and how much) and keeping up to date with market changes.