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Tables of Contents for Return on Investment Manual
Chapter/Section Title
Page #
Page Count
ABOUT THE AUTHOR
vii
2
WHAT THIS MANUAL WILL DO FOR YOU
ix
10
ILLUSTRATIONS
xix
1 KEY RETURN ON INVESTMENT CONSIDERATIONS FOR DEVELOPING EFFECTIVE DECISION-MAKING STRATEGIES
3
11
Why a Business Needs to Maintain an Adequate Return on Investment Rate
4
1
The Vital Role of ROI
5
3
Major Uses and Applications of ROI
8
1
Methods for Measuring Historical versus Anticipated Future Earnings
9
1
Three Cautions About Using the ROI Concept
9
2
Guidelines for Allocating Controllable versus Noncontrollable Data
11
1
Decision-Making Strategies
12
2
2 HOW TO ANALYZE, MANAGE, AND ESTABLISH YOUR COMPANY'S RETURN ON INVESTMENT RATE
14
24
Three Key Components of ROI
14
6
The ROI Equation Using Return on Total Assets
20
3
Calculating Return on Net Assets (RONA)--An Example
23
1
How to Determine Industry ROI Rates
23
8
Establishing ROI Responsibility Using the Organization Chart
31
1
Determine the Profitability Rate and Turnover Rate at Various Levels of ROI
31
1
How to Increase Return on Total Assets
31
3
How to Analyze ROI Variances
34
3
Decision-Making Strategies
37
1
3 HOW TO USE RATIOS TO MONITOR ROI PERFORMANCE
38
11
Three Approaches to Analyzing Ratios
38
1
The Relationship of ROI to Financial Statements
39
6
Altman Z-Score Model: How Ratios Can Be Used to Predict Bankruptcy
45
2
Cautions in Using Ratios
47
1
Decision-Making Strategies
48
1
4 SHAREHOLDER VALUE AND ITS IMPACT ON ROI PERFORMANCE
49
7
Creating Shareholder Value
50
1
Two Methods Used for Measuring Shareholder Value
50
4
Decision-Making Strategies
54
2
5 COST OF CAPITAL AND ITS APPLICATIONS TO ROI OBJECTIVES
56
10
How Cost of Capital Is Used
56
1
Incremental Cost Method
57
7
The Weighted Average Cost of Capital Method
64
1
Decision-Making Strategies
65
1
6 MANAGING WORKING CAPITAL TO INCREASE ROI RESULTS
66
6
Current Assets
66
1
Working Capital
67
2
How Investing in Working Capital Impacts the ROI Equation
69
1
Managing Working Capital Through Ratios
69
2
Decision-Making Strategies
71
1
7 HOW MANAGING CASH IMPROVES ROI PERFORMANCE
72
9
Typical Methods for Managing Cash
72
3
How to Determine How Much Cash Is Needed to Pay Operating Expenses
75
1
How to Determine the Cash Cycle
76
1
How to Determine the Cash Turnover
77
1
How to Determine the Minimum Operating Cash Balance
78
1
How the Baumol Model Is Used for Calculating the Optimum Amount of Cash
78
2
Decision-Making Strategies
80
1
8 MANAGING ACCOUNTS RECEIVABLE AND CURRENT LIABILITIES
81
12
Guidelines for Managing Accounts Receivable and Its Impact on ROI
81
5
General Guidelines for Managing Current Liabilities
86
1
Evaluating the Impact of Cash Discounts
86
2
The Impact of Shifting Funds on ROI
88
3
Profitability and Risk Conclusions
91
1
Decision-Making Strategies
92
1
9 INVENTORY MANAGEMENT--KEY TO HIGHER RETURNS
93
15
Factors That Influence the Level of Inventory
93
1
Key Elements in Managing Inventory
94
1
Rations for Controlling Inventory
95
1
Inventory Management Techniques
96
3
Just-in-Time Inventory
99
1
Inventory Costs
99
1
How Inventory Is Managed Using Three Types of Inventory Models
101
4
ROI Decisions in Inventory Control
105
1
Decision-Making Strategies
106
2
10 CASH FORECASTING AND DETERMINING A COMPANY'S CASH NEEDS
108
22
Reasons for Cash Forecasting
108
3
Cash Forecasting Techniques
111
12
Statement of Cash Flows
123
6
Decision-Making Strategies
129
1
11 HOW TO APPLY ROI TECHNIQUES FOR IMPROVING MARKETING PERFORMANCE
130
10
Traditional Concepts Segments Within the Structure of a Company
130
2
How to Measure Marketing Performance Using Return on Marketing Assets
132
4
Effect on Individual Assumptions
136
3
Decision-Making Strategies
139
1
12 PRICING STRATEGIES AND THEIR IMPACT ON THE PROFITABILITY RATE
140
24
Key Factors Affecting Pricing
140
1
Influences on Pricing Decisions
141
1
Checklist of Pricing Strategies
141
2
Four Pricing Techniques
143
4
Transfer Pricing Techniques
157
6
Decision-Making Strategies
163
1
13 HOW COST CONTROL CAN BE USED TO ACHIEVE HIGHER PROFITS AND ROI
164
15
How Controlling Your Costs Increases ROI
164
1
How to Identify a Cost Problem
165
3
Controlling Manufacturing Costs
168
2
Controlling Segments of the Business
170
1
Checklist of Types of Costs
171
2
Standard Costing Variances
173
2
Gross Profit Variances
175
3
Decision-Making Strategies
178
1
14 THE IMPACT OF DIRECT VERSUS FULL-ABSORPTION COSTING ON ROI DECISIONS
179
9
Using the Full-Absorption Costing Method
179
2
Using the Direct Costing Method
181
3
How Different Assumptions Can Impact Operating Decisions
184
3
Decision-Making Strategies
187
1
15 HOW TO APPLY ACTIVITY-BASED COSTING FOR IMPROVING ROI
188
15
An Example of Allocating Indirect Costs Using Activity-Based Costing
188
2
Defining Activity-Based Costing
190
2
Ten Steps for Establishing an Activity-Based Cost System
192
9
Decision-Making Strategies
201
2
16 HOW TO USE BREAK-EVEN TECHNIQUES FOR ROI DECISION MAKING
203
13
Defining Types of Costs
204
2
Break-Even Calculations
206
4
Using Break-Even Charts
210
1
How Changes Affect the Break-Even Point
211
4
Decision-Making Strategies
215
1
17 HOW THE MARGIN RATE IS USED TO PROJECT PROFITS
216
6
How to Determine Break-Even--A Different Approach
216
1
Computing Estimated Profits
217
1
Multiple-Product Analysis
218
3
Decision-Making Strategies
221
1
18 AN ROI APPROACH TO EVALUATING INVESTMENTS IN HUMAN RESOURCES
222
15
Evaluating the Impact of Human Resources on ROI
223
1
The Mechanics of Human Resource Accounting
224
1
Advantages and Disadvantages of Using the ROI Concept for HR Evaluation
225
1
Human Assets versus Capital Assets
226
1
Methods for Measuring the Value of Human Resources
227
1
Costs of Human Resources
228
1
Techniques for Determining a Return on Investment Rate for Employee Measurement
229
4
The Overall Impact of HR Expenditures on the Financial Statement
233
1
Using Ratio Comparisons
234
2
Decision-Making Strategies
236
1
19 CAPITAL INVESTMENTS--THE KEY TO HIGHER PROFITS, CASH FLOWS, AND RETURN ON INVESTMENT
237
27
Why Capital Investments Are Important
237
2
Types of Asset Investments
239
1
Types of Capital Expenditure Classifications
240
1
Factors Involved in the Investment Decision
241
3
What the Capital Investment Process Should Accomplish
244
2
A Checklist of Steps in the Capital Investment Process
246
4
Capital Investment Proposal--A Practical Example
250
3
Considerations in Financing Capital Investments
253
5
How Funds Can Be Generated Internally
258
1
How Funds Can Be Generated Externally
259
4
Decision-Making Strategies
263
1
20 HOW TO USE CAPITAL INVESTMENT EVALUATION TECHNIQUES TO INCREASE ROI
264
86
The Prerequisites of an Acceptable Method of Calculation
264
1
How to Calculate a Project's Cash Flow
265
3
How to Develop a Capital Expenditure Cash Flow Statement
268
1
The Payback Period Method for Evaluating a Capital Expenditure
268
6
The Discounted Cash Flow Method for Evaluating a Capital Expenditure
274
4
How to Select a Discount Rate
278
1
Illustration of a Loan Repayment and Determining the DCF Rate
278
1
Illustration of Discounted Cash Flow Methods
279
6
Using Risk Applications to Measure Capital Investment Return Rates
285
9
Sample of Capital Investment Policies and Procedures
294
55
Decision-Making Strategies
349
1
21 LEASING--AN ALTERNATIVE FINANCING METHOD FOR INCREASING ROI RATES
350
8
Advantages of Leasing
351
1
Disadvantages of Leasing
352
1
Sources of Leases
352
1
Lease Terminology
353
1
Operating Lease versus Capital Lease Defined
353
1
Calculating the Impact of Leasing versus Purchasing
354
3
Decision-Making Strategies
357
1
22 HOW TO EVALUATE ENERGY CONSERVATION USING ROI TECHNIQUES
358
7
How the Payback Period Is Calculated
359
1
Figuring Return on Investment Using Depreciation Charges
359
1
Other Energy Investment Measurement Techniques
360
1
Illustration
360
3
Decision-Making Strategies
363
2
APPENDIX A: PRESENT VALUE TABLES
365
4
APPENDIX B: COMPOUND TABLES
369
4
GLOSSARY
373
10
INDEX
383