B2 Flashcards
how is NPV calculated?
discounted cash flows-initial investment
what is a good approach to accounting estimates
estimate probable future losses
NRV-inventory
allowance for A/R
depreciation for ppe
what does the payback period ignore?
ignores cash flows once the initial investment has been recovered.
profitability index
present value of future cash flows/present value of initial investment
payback period
initial investment/net annual cash flow
what is the most spontaneous/ fast way to fund a company?
accounts payable.
A/R takes time to factor
debentures and pref. stock take time to issue
what does EOQ assume?
that periodic demand is known
what does a discount mean?
issed at stated rate so market rate must be more than stated rate for a discount
price-earnings ratio
current dividend market price/annual earnings per share
what would JIT inventory take into account?
seasonal fluctuations
what affects the optimal levelof inventory
cost of placing an order
lead time
cost per unit of inventory
what has no impact on the optimal level of inventory?
the current level of inventory, it has to do with costs to get the new inventory
what is a carying cost
obsolecence
insurance
storage
opp cost
what would cause irr to decrease
a decrease in tax credits increases the initial net investment causing pv to increase
