About This Chapter
Project Evaluation & Analysis -- Chapter Summary and Learning Objectives
Before risking resources on a major new project, such as a factory or new product line, companies must determine how much they can spend and still remain profitable when the project is complete. These engaging video lessons will show you the techniques used to determine risk, project likely cash flows, and capital rationing on any new project. Topics covered in the chapter include:
- Determination of current resources
- Examination of possible project outcomes
- Determination of when the project is likely to break-even
- Exploration of the health of a company's operating income
- Explanation of caps put on capital expenditures to limit risk to the company
|Net Present Value: Evaluating Estimates||Learn about evaluating NPV estimates, forecasting risk, and the sources of value.|
|What-If Analyses: Scenario, Sensitivity & Simulation||Discuss the three types of what-if analyses.|
|Break-Even Analysis: Definition & Example||Take a look at the difference between fixed and variable costs as well as break-even analysis.|
|Accounting Break-Even & Operating Cash Flow||Address operating cash flow, sales volume, and the break-even point in accounting.|
|Operating Leverage: Definition, Calculation & Examples||Explore the measurement, implications, and break-even of operating leverage.|
|Capital Rationing: Definition, Types & Example||Review hard and soft capital rationing.|
1. Net Present Value: Evaluating Estimates
In this lesson we'll take a look at why businesses use net present value, what they need to know to calculate it, and how it can help them make business decisions.
2. What-If Analyses: Scenario, Sensitivity & Simulation
Even the best manager or analyst can't predict the future. But, different types of 'what if' analyses can help managers anticipate potential future scenarios. In this lesson, we'll discuss some of these 'what if' analysis tools.
3. Break-Even Analysis: Definition & Example
Performing a break-even analysis can help you make decisions regarding how much of your product or service you need to sell to make a profit. In this lesson, you'll learn what a break-even analysis is and how it is calculated.
4. Accounting Break-Even & Operating Cash Flow
In business, it's important to know how much product to sell in order to cover your expenses. This is what we refer to as the break-even point. Let's take a look at how to calculate the break-even point and how it relates to operating cash flow.
5. Operating Leverage: Definition, Calculation & Examples
Explore the definition and importance of operating leverage, and take a look at examples to assist you in the accounting process. When you are finished with the lesson, there is a quiz to test your knowledge.
6. Capital Rationing: Definition, Types & Example
In this lesson, you will learn about two types of capital rationing and how to rank projects when your company is subject to rationing. We'll discuss the importance of knowing the profitability index and how to apply it in these situations.
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Other chapters within the Financial Accounting: Help and Review course
- Introduction to Accounting: Help and Review
- Financial Statements in Accounting: Help and Review
- Mechanics of the Accounting Cycle: Help and Review
- Preparing Financial Statements: Help and Review
- Internal Controls in Accounting: Help and Review
- Merchandising Operations and Inventory in Accounting: Help and Review
- Current and Long-Term Liabilities in Accounting: Help and Review
- Adjusting Accounts & Preparing Financial Statements: Help and Review
- Taxation of Business Entities
- Accounting Changes & Errors
- Classifying Costs in Accounting
- Cost Accounting Methods
- Cash Flow Statements & Disclosures
- Asset & Inventory Management
- Small Business Financing
- Small Business Accounting
- Financial Reporting
- Banking, Insurance & Monetary Policy
- Types of Financial Risk
- Credit Risk
- Derivatives in Finance Overview
- Capital Markets in Risk Management
- Managing Financial Risk
- Financial Risk & Decision-Making