Activity-Based Management - ABM

AAA

DEFINITION of 'Activity-Based Management - ABM'

A procedure that originated in the 1980s for analyzing the processes of a business to identify strengths and weaknesses. Specifically, activity-based management seeks out areas where a business is losing money so that those activities can be eliminated or improved to increase profitability. ABM analyzes the costs of employees, equipment, facilities, distribution, overhead and other factors in a business to determine and allocate activity costs.

INVESTOPEDIA EXPLAINS 'Activity-Based Management - ABM'

Activity-based management can be applied to different types of companies, including manufacturers, service providers, non-profits, schools and government agencies, and ABM can provide cost information about any area of operations in a business. In addition to improving profitability, the results of an ABM analysis can help a company produce more accurate budgets and financial forecasts.

RELATED TERMS
  1. Purchasing System

    A method used by businesses to buy products and/or services. ...
  2. Activity Capacity

    The degree to which a particular action is expected to perform. ...
  3. Activity Cost Driver

    A factor that influences or contributes to the expense of certain ...
  4. Activity Center

    A pool of activity costs associated with particular processes ...
  5. Idle Time

    Unproductive time on the part of employees or machines as a result ...
  6. Supply Chain Management - SCM

    Supply chain management is the streamlining of a business' supply-side ...
Related Articles
  1. Time Management Tips For Financial Professionals
    Professionals

    Time Management Tips For Financial Professionals

  2. Evaluating A Company's Management
    Active Trading Fundamentals

    Evaluating A Company's Management

  3. Budgeting While You're In College
    Budgeting

    Budgeting While You're In College

  4. Putting Management Under The Microscope
    Options & Futures

    Putting Management Under The Microscope

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center