Last edited by Grogar
Tuesday, November 10, 2020 | History

2 edition of Financial analysis techniques for equipment replacement decisions. found in the catalog.

Financial analysis techniques for equipment replacement decisions.

Elly Vassilatou-Thanopoulos

Financial analysis techniques for equipment replacement decisions.

  • 43 Want to read
  • 14 Currently reading

Published by National Association of Accountants in New York, N.Y .
Written in English

    Subjects:
  • Replacement of industrial equipment,
  • Depreciation,
  • Cost accounting

  • Edition Notes

    Bibliography: p. 63-66.

    SeriesNAA research monograph -- no. 1
    The Physical Object
    Paginationvii, 67 p. :
    Number of Pages67
    ID Numbers
    Open LibraryOL23330185M

      Analytical techniques are procedures or a methods how to analyse some problem, status or some fact. An analytical technique (analytical method) is a procedure or a method for the analysis of some problem, status or a fact. Analytical techniques are usually time-limited and task-limited. They are used once to solve a specific issue/5.


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Financial analysis techniques for equipment replacement decisions. by Elly Vassilatou-Thanopoulos Download PDF EPUB FB2

Financial analysis techniques for equipment replacement decisions. New York, N.Y.: National Association of Accountants, (OCoLC) Document Type: Book: All Authors / Contributors: Elly Vassilatou-Thanopoulos; National Association of Accountants.

This book embraces a broad range of financial analyses and can be used as a primer by finance, accounting, and general management on the tools and techniques to solve financial problems and make effective business decisions."--From the Introduction.5/5(1). Financial Analysis Tools and Techniques, a business-focused revision of Erich Helfert's perennial college bestseller Techniques of Financial Analysis, is a quick, easy read for nonfinancial managers and an excellent refresher and reference for finance professionals.

This practical, hands-on guide provides a new introductory chapter that gives context to today's Cited by: - Book value or written down value is irrelevant for the decisions- loss on sale of old machinery is irrelevant for this decision.

- Sales proceeds of old equipment is relevant for the decision and be considered for this analysis.- Replacement of machinery may bring down the cost per unit, but it may involve capital outlay. Here the firm may have to decide at what point replacement.

Estimation of incremental cash flows for such replacement analysis involves calculation of net cash flows of the defender, net cash flows of the challenger and then finding the difference in cash flows for both the assets.

Technique. Calculating periodic cash flows of existing asset is straight forward. Chapter 10 Replacement Analysis EAC of Maintenance = $1, + 1, (A/G, 15%, n) A manufacturer is contemplating the purchase of an additional forklift truck to improve material handling in the plant.

He is considering two popular models, the Convair T6 and the FMC The relevant financial data are shown below. In replacement analysis, the defender is an existing asset; the challenger is the best available replacement candidate.

The current market value is the value to use in preparing a defender’s economic analysis. Sunk costs —past costs that cannot be changed by any future investment decision— should not be considered in an. b A unique feature of the analysis of a replacement decision is that.

the analysis considers total rather than differential costs. the amount used as the cost of the investment is not likely to equal the price to be paid for the new asset.

the time value of money is ignored. such Financial analysis techniques for equipment replacement decisions. book seldom involve cash flows. a equipment life because they provide two important means to approach replacement analysis and to ultimately make an equipment replacement decision (Douglas ).

The concepts of depreciation, inflation, investment, maintenance and repairs, downtime, and obsolescence are all integral to replacement analysis (Gransberg et al. Equipment replacement decisions. An equipment replacement decision, under incremental analysis, requires A.

calculating the present value of all cash flows associated with the new equipment minus the salvage value of Financial analysis techniques for equipment replacement decisions. book old asset. calculating the present value of all changes in cash flows from the old equipment to the new equipment. (iv) Salvage value of existing equipment and challenger at the end of its useful life.

(v) Improvement in productivity and quality by use of challenger. (vi) Saving in space by use of new machine. (vii) Reduction in scrap and waste by use of new machine. Capital budgeting analysis techniques are applicable to equipment replacement decisions. The amount and timing of cash flows is critical to the calculation of the net present value of an investment.

The cost of capital is equal to a company's maximum desired rate of return. fact that through the use of the techniques of the financial analysis and control, the financial performances of the firms are assessed. Therefore, the techniques of financial analysis and control mainly include the following, presented in UNIT # TWO: 1.

Financial Ratio Analysis: Theoretical Background (Lesson: 1) 2. Decisions, Decisions –Making Decisions at the Individual Level M 16 A Decisions, Decisions –Making Decisions at the Individual Level M 17 Investigate – I want to buy a car so I go to Consumer Reports and other sites to find the best cars for the environment and to and other sites to research prices.

CHAPTER 1 The Challenge of Financial/Economic Decision-Making is managing the system entrusted to it by the shareholders in a coherent systems manner, and financial/economic analysis as we’ll discuss it in this book is a criti- cal component supporting this integrated Size: 3MB.

Equipment Maintenance and Replacement Decision Making Processes Michael W. Gage This project contains recommendations for the decision making processes for support and production equipment maintenance and replacement for a large defense contractor.

Recent literature has been reviewed to provide perspective on current trends in the field. A complete. recommendation for the decision maker. Keywords: Repair, Replace, Decision, Electricity, 1 INTRODUCTION The decision to repair or replace an asset can be an easy or difficult decision.

Minor low cost failures on young assets and major failures of assets, particularly aged assets, are often very clear and easy decisions to Size: KB. Financial Analysis is defined as being the process of identifying financial strength and weakness of a business by establishing relationship between the elements of balance sheet and income statement.

Praise for Financial Analysis Tools and Techniques: "Bona fide treasury for executives, managers, entrepreneurs. Have long used this great work in corporate & university programs.

Uniquely makes the arcane clear."­­Allen B. Barnes, Provost, IBM Advanced Business Institute "A candidate for every consultant-to-management's bookshelf. Its beauty lies in the 5/5(1). This IRM provides instructions for securing, verifying and analyzing financial information.

This analysis provides the basis for determining a taxpayer’s ability to pay delinquent tax liabilities, which enables Collection employees to make appropriate collection decisions to resolve cases. Appendix Capital Investment Decisions: An Overview Investment Cash Flows There are three types of investment cash flows: 1.

Asset acquisition, which includes a. New equipment costs, including installation (outflow). Proceeds of existing assets sold, net of taxes (inflow). Tax effects arising from a loss or gain (inflow outflow). Size: KB. Financial analysis is an important skill for purchasers, it can help them to understand their supplier’s accounts and quotations in further detail and formulate reports using ratios to make better use of information available.

These reports can then be used as the basis for making informed decisions. Praise for Financial Analysis Tools and Techniques "Bona fide treasury for executives, managers, entrepreneurs.

Have long used this great work in corporate & university programs. Uniquely makes the arcane clear."--Allen B. Barnes, Provost, IBM Advanced Business Institute "A candidate for every consultant-to-management's bookshelf/5(15). Synopsis This title contains proven techniques for all managers and financial professionals to generate, understand, and act upon key financial information.

The syntax and 'code' of financial analysis, along with the avenues for arriving at appropriate and useful answers, have long seemed like /5(3). However, on the basis of financial statements, the objective of financial analysis is to draw information to facilitate decision making, to evaluate the strength and the weakness of a business, to determine the earning capacity, to provide insights on liquidity, solvency and profitability and to decide the future prospects of a business entity.1/5(1).

Engineering Economic (Part 12) Replacement Analysis - Duration: Zao R. 91 views. For full course, visit: Whatsapp: + Explained the procedure to solve few problems based on replacement of an existing Plant and Machinery.

In this. Financial analysis is the process of evaluating businesses, projects, budgets and other finance-related entities to determine their performance and suitability. Typically, financial analysis. Financial analysis is the examination of financial information to reach business decisions.

This analysis typically involves an examination of both historical and projected profitability, cash flows, and may result in the reallocation of resources to or from a business or a specific internal operation.

CAPITAL BUDGETING TECHNIQUES Introduction basic principles of financial analysis that stipulates the cash flows occurring at I0 book value of investment in the beginning, In book value of investment at the end of n years.

For example, A project requires an investment of Rs. 10,00, The plant &File Size: KB. Proven Techniques for All Managers and Financial Professionals to Generate, Understand, and Act Upon Key Financial Information The syntax and "code" of financial analysis, along with the avenues for arriving at appropriate and useful answers, have long seemed like a foreign language to nonfinancial managers/5(15).

Establishing replacement cycles for medium-duty trucks is both an art and science. It involves judgment, prediction, forecasts, and assumptions on one hand, and analysis of available data on the other.

When financial resources are limited, the effort will focus more on prioritizing which one of many vehicle candidates should be replaced. Asset replacement project cash flows 31 Example The Repco Replacement Investment Project 32 Concluding comments 34 Review questions 35 3 Forecasting cash flows: quantitative techniques and routes 37 Study objectives 39 Quantitative techniques: forecasting with regression analysis; forecasting with time-trend projections; forecasting usingCited by: A solid understanding of financial analysis is an essential­­but often overlooked­­prerequisite to making key strategic ial Analysis and Decision Making explains how all professionals can use the tools and techniques of financial analysis to define problems, gather and organize relevant information, and improve problem-solving s: 1.

The Essentials of Capital Budgeting in Financial Analysis. Objectives: Know why capital budgeting is an essential aspect of the firm.

Define capital expenditures and capital revenues. Review cash flow analysis and the cash flow budget. Know the other primary types of capital budgets used to aid in decision making. CAPITAL BUDGETING. Replacement Chain Method: A capital budgeting decision model that is used to compare two or more mutually exclusive capital proposals with unequal lives.

The Replacement Chain Method is a decision Author: Will Kenton. "Financial Analysis: Tools and Techniques" is a quick and easy read for the nonfinancial manager and an excellent refresher and reference for the financial professional.

In conjunction with its companion software Financial Genome, it represents the next step in financial analysis one that gives financial analysis and economic decisions their. In cost accounting, outsourcing is defined as purchasing a good or service from an outside vendor rather than producing the good or service in-house.

It’s also referred to as a make versus buy decision. A decision to outsource certainly considers reducing costs as a goal. If you can get the same (or virtually the same) [ ]. ADVERTISEMENTS: After reading this article you will learn about: 1.

Meaning of Capital Investment Decisions 2. Significance of Capital Investment Decisions 3. Techniques used. Meaning of Capital Investment Decisions: Investment means laying out the money (also known as outlay) on an activity or a project with the expectation of some benefit. In an enterprise. In cost accounting, qualitative factors don’t involve numbers and financial analysis.

Call them “people” factors. Decisions based in part on qualitative factors are relevant, even though you can’t tie specific cost or revenue numbers to them. They can have a long-term impact on profitability, so you need to consider them.

Qualitative factors should always be [ ]. Such replacement decisions often occur when faster and more efficient machinery and equipment appear on the market. The computation of the net cash inflow is more complex for a replacement decision than for an acquisition decision because cash inflows and outflows for two items (the asset being replaced and the new asset) must be considered.An irrelevant cost is a cost that will not change as the result of a management decision.

However, the same cost may be relevant to a different management decision. Consequently, it is important to formally define and document those costs that should be excluded from consideration when reaching a decision.Capital Budgeting. Capital budgeting is a long term planning for replacement of an old inefficient equipment and /or additional equipment or physical plant when growing business conditions warrant.

Capital budgeting will determine when the organization is able to afford the purchase of the equipment.