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Life cycle costing definition

Accounting Tools

Understanding Life Cycle Costing The life cycle costing concept applies to multiple areas, including capital budgeting, procurement, engineering, and customer service. This analysis can lead to more robust products, once management realizes that sturdier products incur lower warranty and field servicing costs.

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The difference between NPV and IRR

Accounting Tools

Related AccountingTools Courses Capital Budgeting Financial Analysis Comparing NPV and IRR The two capital budgeting methods have the following differences: Outcome. IRR tends to be calculated as part of the capital budgeting process and supplied as additional information.

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Discount rate definition

Accounting Tools

Related AccountingTools Courses Capital Budgeting Financial Analysis Related Article Risk-Adjusted Discount Rate The term also refers to the interest rate that the Federal Reserve Bank charges to depository institutions that take loans from the Fed's discount window.

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Why we can’t keep old reports (and other burning questions)

Xero

Our new reports are built on the latest technology and have some really exciting features that will help you get quick access to answers and streamline your financial analysis. Next, we’ll be working on adding the ability to translate Profit & Loss, Balance Sheet and Budget Variance reports into foreign currency.

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Negative IRR definition

Accounting Tools

This concept is most commonly found at the financial analysis stage of a capital investment, where the projected cash flows of a proposed investment are examined. Negative IRR occurs when the aggregate amount of cash flows caused by an investment is less than the amount of the initial investment.

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Trend analysis definition

Accounting Tools

Thus, trend analysis is quite useful for examining preliminary financial statements for inaccuracies, to see if adjustments should be made before the statements are released for general use. Extend revenue and expense line items into the future for budgeting purposes, to estimate future results.

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Internal rate of return (IRR) definition

Accounting Tools

When to Use the Internal Rate of Return IRR is commonly used in capital budgeting , where the IRR of a proposed investment should be higher than an entity's cost of capital before the investment will be accepted. A proposed investment with a high IRR is usually considered a desirable use of funds.