文档介绍：Financial Analysis
Operations Management
petitive Advantage
CHASE AQUILANO JACOBS
ninth edition
Supplement B
Supplement B Financial Analysis
Cost Definitions
Expected Value
Depreciation
Activity-Based Costing
Investment Categories
Cost of Capital
Interest Rate Effects
Methods of Ranking Investments
Cost Definitions
Fixed costs are any expenses that remains constant regardless of the level of output.
Variable costs are expenses that fluctuate directly with changes in the level of output.
Sunk costs are past expenses or investments that have no salvage value and therefore should not be taken into account in considering investment alternatives.
Cost Definitions (Continued)
Opportunity cost is the benefit forgone, or advantage lost, that results from choosing one action over the best alternative course of action.
Avoidable costs include any expense that is not incurred if an investment is made but must be incurred if the investment is not made.
Expected Value
This analysis is used to include risk factors (probabilities) with payoff values for decision making.
Basic premise:
Expected Value= Expected e x Probability of e occurring
Economic Life and Obsolescence
Economic life of a machine is the period time over which it provides the best method for performing its task.
Obsolescence occurs when a machine is worn out.
Depreciation
Depreciation is a method for allocating costs of capital investment, including buildings, machinery, etc.
Depreciation procedures may not reflect an asset’s true value because obsolescence may at any time cause a large difference between the true value and book value.
Depreciation Methods
Straight-Line Method
Sum-of-the-Years’-Digits (SYD) Method
Declining-Balance Method
Double-Declining-Balance Method
Depreciation-by-Use Method
Traditional and Activity-Based Costing
Traditional Costing
Total overhead
End product cost
Labor-hour
allocation
Activity-Based Costing
Total overhead
Cost pools
End product cost
Cost-driver