Business Economics 8 “Scientific Perfections”
In the area of business economics, a lot is currently being poorly taught by schools / universities around the world and this leads to the danger of bad policy decisions being made by business. This article presents 8 main elements on this subject:
- NPV (Net Present Value) and IRR (Internal Rate of Return)
The discussion of which is better, NPV or IRR, mistakenly seen as two different investment selection methods, is irrelevant, as understanding the behavior of the underlying polynomial y = f (x), which is basically necessary, and simultaneously with the two results, NPV and TRI. The NPV / IRR method does not take into account the possible depreciation of the backlog; the investment is only settled on the basis of the historical cost price. The method can select in the negative direction but usually not in the positive direction. Do NOT do this, i.e. declare a project UNacceptable, which is possible with NPV / IRR as suggested. But prioritizing two or more acceptable projects is generally not possible with NPV / IRR.Re Annex 10.2 The “Go / No Go” decision regarding strategic book investments The Profit Formula® ISBN 9781086333992 available on Amazon. The separate consideration of only investments is hardly worth the trouble, because it is part of the trinity: INVESTING, DEPRECIATION, MEASURING PROFIT
- Review of all depreciation methods in the literature
they are not flexible
Additional exercises are sometimes necessary (fi amortization of the backlog)
The method of financing is often not taken into account.
The rigid damping methods in the literature do not follow actual values; they only present artificial figures. They are unreliable because not only are they determined by the chosen method, but they depend on a Assumed life cycle of each method.
- The “ideal complex” is not ideal
The “ideal complex” concerns each resource complex whose age structure is such that the number of work units taken out of service each year is exactly the same as the number of new work units purchased each year. ; this can be called ideal, but unfortunately it almost never applies. In any other financial structure, depreciation must be determined exactly, taking into account that particular financial structure. Then there is nothing obvious. Almost always with a so-called ideal complex, the depreciation (all differences in value) must be calculated precisely.
- Economic Life Cycle_Determined SUC is currently set too low
The standard prices of the work units of tangible fixed assets are, among other quantities, input data required in order to establish the minimum prices of the products. However, this important data is not calculated exactly – if it is calculated according to the best textbooks used in the world – it is consistently too low.
The economic life cycle calculation to date should be followed by the NEW algorithm presented in ISBN 9781086355635 by Jan Jacobs, available on Amazon
- Divergent AC and DC calculations
There is an easy formula to learn. One formula. For AC and DC. And for all that one can think of around the analysis of the breakeven point and the iso profit lines. Many manuals present a variety of DC and AC calculations. For direct current and alternating current, a simple calculation diagram is sufficient, a unique formula and then easy to make illustrative drawings.
- Budgeting and budget control
No Greek words have been used in the full elaborations in ISBN 9781086355635 and while factual formulas have been used, everything is automatically written in the sense of logic so that everyone can also understand the analysis performed. There is no need to analyze the differences, rather than common sense. Remember that every analysis should be clear and transparent. If it is not complete, it carries the risk of bad political decisions being made.
- Declaration of the source and use of funds
About ICF, FCF and OCF. Every penny, inside and out. Easy to set up, not from the bottom line, but from the top of the income statement. Not the profit plus the depreciation, with which so many theory books begin, because then a lot of things disappear out of sight. Add the invoiced turnover (at the top of the income statement) to what the debtors were (see previous balance sheet). Suppose no debtor has paid even a cent, the debtors should now represent the total sum. However, debtors are (see current balance sheet) what they are. Subtracting that from the sum and the difference are the payments apparently received from debtors; if necessary, debits can still be settled on unpaid debtors. Ditto, all these other elements. Look what it was. Suppose there is not a penny moving. What should it be now? And it’s? Ergo, the real cash flow must make the difference, aside from the complications. This is to clearly show the flow of money. With regard to investing and financing activities, there is often no dispute; but when it comes to operational activities (OCF), it turns out that there are a lot of differences of opinion. While the OCF also derives from an exact calculation, as well as the ICF and FCF.
- Measure period earnings, EXACTLY, QUICKLY and EASILY
One of the main topics in business economics is the determination of profits. The problem of determining the operating profit of a company being considered as such, truly global, it is deemed insoluble. A solution would not exist. “Perhaps we should compare the search for an ideal accounting system with the search for the Philosopher’s Stone or the Elixir of Life (Whittington, 1983, p. Ix). “Is the determination of profit possible?” Yes! NEWS FROM THE WORLD!
The adage “profit is an opinion” is no longer true. Everyone c
a period of profit measurement. See how complicated the elaborations are through the old ways, and how wonderfully simple with the help of The Profit® formula. Simplicity is indeed often the mark of truth. All the profit calculation systems known to date generate a lot of work. If we use The Profit Formula® regarding all values and standards, any profit can be calculated quickly and easily. Using this method to measure profit is “a snap.”
On YouTube, search for: The easy way to measure benefits_2 EXAMPLES (fully developed) https://www.youtube.com/watch?v=7p98M6UKOJk&t=88s
After replacement, any new video gets a new url
On YouTube, search for: The easy way to measure benefits_AMPLIFICATIONS https://www.youtube.com/watch?v=qaFAFjQ5js8&t=163s The 8 “Scientific Perfections” mentioned above are explained in detail in “Business Economics VI Groundbreaking” ISBN 9781086355635 Softcover and eBook available on Amazon.
Written by Jan Jacobs.
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