| Ad hoc tools |
NET PRESENT VALUE (NPV)
Net present value (NPV) analysis helps businesses to make capital
investment decisions. This tool also includes calculations of internal
rate of return (IRR), payback period, and profitability index, which
are other common measures for investment decisions. |
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LEASE-BUY ANALYSIS BETA
Companies have many times the option between leasing and buying capital
equipment, either through a loan or with cash on hand. This tool
allows to compare these three options. |
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PRICING ANALYSIS
Pricing a product or service is based on factors like competitors’ pricing,
product or service costs, and price-volume relationships. This pricing
analysis helps to evaluate these factors to make an optimal pricing
decision. |
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| Advanced analyses |
NPV WITH MONTE CARLO SIMULATION
A capital investment project is not a black box but its outcome depends
on several factors, some more relevant than others. The advanced
NPV analysis helps to identify these relevant investment drivers
with techniques like Monte Carlo simulation, risk and sensitivity
analysis, helping to reduce the uncertainty about the project outcome. |
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SALES FORECAST SIMULATION
Sales forecasts, like every projection of the future, contain errors.
The best forecasters try to minimize these errors. This tool helps
to minimize these errors through sensitivity analysis und Monte Carlo
simulation. |
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OPTIMAL INVENTORY LEVELS
Some businesses consider inventory a liability since it ties up their
cash and may need to be written off if the projected sales don’t
materialize. Others see inventory as an asset that helps companies
quickly react to increased customer demands. But most decisions makers
are looking for the right balance. This tool helps to asses the optimal
inventory levels by taking into account supply chain length, sales
forecast accuracy, distribution costs, and the opportunity costs
of lost sales. |
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