Introduction to Inventory Control Model

Inventory Control Models Inventory is an expensive and important asset to many companies or organization or institution. Some Feature of Inventory Control Models 01. Lower inventory levels can reduce costs. 02. Low inventory levels may result in stockouts and dissatisfied customers 03. Most companies try to balance high and low inventory levels with cost minimization as a goal 04. Inventory is any stored resource used to satisfy a current or future need Common examples are raw materials, work-in-process, and finished goods 05. Inventory may account for 50% of the total invested capital of an organization and 70% of the cost of goods sold 06....

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Introduction of Project Management

Project ManagementMost realistic projects are large and complex in decision making. Tens of thousands of steps and millions of dollars may be involved Managing large-scale, complicated projects effectively is a difficult problem and the stakes are high The first step in planning and scheduling a project is to develop the work breakdown structure Time, cost, resource requirements, predecessors, and people required are identified for each activity Then a schedule for the project can be develo...

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The Importance of Accounting

The Importance of Accounting in Today’s World Importance of AccountingThe Importance of Accounting as a Separate DisciplineIn the business world, accounting is one discipline of study that all people in the world, regardless of job position, should have some knowledge of. Accounting's concepts can be applied to all job specialties, Accounting is importance has been promoted in recent years, and Accounting is useful in people’s everyday lives. First, an accounting education is important because accounting as a discipline can be applied in all job specialties. Secretaries must use accounting skills to manage the company check book and orders, auditors have to study financial statements to evaluate the accuracy and integrity of the business, and executives need to judge the success...

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Concept of Weighted average cost of Capital

Concept of Weighted average cost of Capital Generally the cost of capital of a firm is the weighted average cost of various source of finance used by it. If the firm uses n different sources of finance, its WACC is . WACC = ∑xiki where x is the proportion of ith source of finance and ki is the cost of the ith source of finance. Suppose that a firm uses equity costing 15% and debt costing 8% . If the proportions in which the equity and debt are used are respectively 40% and 60%, its WACC will be: WACC = Proportion of equity x Cost of equity + Proportion of debt x C =0.40x 15%+0.60x8% =6%+4.8% = 10.8% The following three steps are involved in calculation of cost of capital (WACC) " •Determinateof the cost of different components of capital •Establish a set of weights (proportions) •C-1culate...

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Assumptions of Cost of Capital

Cost of capital is a dynamic concept. It is affected by various factors like internal and external factors. The different considerable factors to calculate weighted average cost of capital are discussed below: 1.Business risk to be unchanged 2.Financial risk to be unchanged 3.After tax co...

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Significance of the cost of capital (Briefly)

Evaluating investment decision. The primary purpose of measuring the cost of capital is its use as a financial standard for evaluating the investment projects. In the NPV method, an investment project is accepted if it has a positive NPV. The project's NPV is calculated by discounting its cash flows by the cost of capital. In this sense, the cost of capital is the discount rate used for evaluating the desirability of an investment project In the IRR method, the investment project is accepted if it has an internal rate of return greater than the cost of capital. In this context, the cost of capital is the minimum required rate of return on an investment project. It is also known as the cutoff rate, or the hurdle rate. Designing a firm's debt policy. The debt policy of a firm is significantly...

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Significance of the cost of capital

Significance of the cost of capitalCost of capital is a concept of vital importance in the financial decision-making. It is useful as a standard for: • Evaluating investment decisions, • Designing a firm's debt policy, and • Appraising the financial performance of top management • Designing, dividend policy • Determining the value of the f...

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