Summary Saxion Financial and Management Accounting part 3 2018/2019

Finance and
Accounting/Managerial
Accounting
Investment Analysis
Part 3
Topic outline
 Investment Decisions
 Budget

Investment Decisions
 Robert and his wife would like to buy another coffee cart, with the following details.




 Is this wise investment? Calculate the
o Payback period
o NPV
 Note: both methods use the (yearly) cash flows, not the operating profit!
 Cash flow = operating profit + depreciation
 Depreciation
o (20.000 – 6.000) / 5 = 2.800
 Yearly cash flows
o 1.350 + 2.800 = 4.150




 NPV  €653,25
 Payback period in months 4,8

, Budgets
 A budget is a business plan for the short term – typically one year – and is expressed
mainly in financial terms.