Presentation is loading. Please wait.

Presentation is loading. Please wait.

Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 1 17/05/2004 Economic techniques for MCS External accounting and Ratio analysis Cost accounting.

Similar presentations


Presentation on theme: "Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 1 17/05/2004 Economic techniques for MCS External accounting and Ratio analysis Cost accounting."— Presentation transcript:

1 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 1 17/05/2004 Economic techniques for MCS External accounting and Ratio analysis Cost accounting

2 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 2 17/05/2004 External accounting and ratio analysis Ratio analysis: ROE analysis Main indicators of profitability analysis: ROE = return on equity = earning/equity ROE represents the return on the total shareholder capital Financial leverage formula to analyze ROE: ROE = [ ROI + D/E (ROI - r)] s ROI = return on investment = net operating margin / total assets ROI represent the return on all the companys assets (either financed by shareholder or by other investors, such as banks) of the operating activities Sometimes referred to as RONA = Return on net assets

3 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 3 17/05/2004 External accounting and ratio analysis Ratio analysis: ROE analysis r = average cost of liabilities=financial expenses/total liabilities s = net income/income before taxes and extra-ordinary costs and revenues L = leverage ratio = D / E = Liabilities / Equity

4 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 4 17/05/2004 External accounting and ratio analysis Ratio analysis: ROI and ROS analysis Main indicators to analyze ROI: ROS = return on sales = net operating margin / sales ROS represents the margin achieved for each (or $ or whatever …) of sales ROS can be analyzed in terms of different components: sales – material consumption – services – employee expenses – amortisation where: material consumption=purchases + opening inventories – ending inventories; Sales – material consumption – services=Gross Value Added

5 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 5 17/05/2004 External accounting and ratio analysis Ratio analysis: ROI and Asset Rotation analysis Asset Rotation: sales / total assets Represents the capability of the company in the efficient use of invested resources (i.e. inventories, receivables, machinery) in the short period Asset Rotation can be analyzed in terms of: inventories rotation, plant rotation; average time of receivables payment (in days)

6 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 6 17/05/2004 External accounting and ratio analysis Ratio analysis Main indicators of liquidity analysis in the short period: Current Ratio: Current Assets/Current Liabilities Acid Test: (Current Assets – Inventories)/Current Liabilities In the long period: Operating Cash Flow/Financial Liabilities where Operating Cash Flow=net operating income + amortisation and depreciation

7 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 7 17/05/2004 Cost accounting techniques COST CLASSIFICATION direct costs: can be directly associated, in a univocal way, to a definite product/service indirect: cannot be... variable costs: related to a variation of the productive volume (they increase when the volume increases) fixed costs: not related to.... manufacturing costs: associated to the acquisition and conversion of materials and all other manufacturing inputs into output, i.e. relating to all the activities connected with manufacturing non manufacturing costs: all the others overhead costs: all indirect, manufacturing costs, i.e. costs related to manufacturing but non directly connected to a specific product. conversion costs= direct labor costs + overhead costs standard costs: defined a priori, with hypotesis of normal, regular and efficient activity actual costs: actually incurred by the company

8 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 8 17/05/2004 full manufacturing cost and full cost full manufacturing cost and full cost Direct labour Indirect manufacturing costs (overhead) Non manufacturing costs Full manufacturing costs Direct material costs Conversion costs Full cost += += +=

9 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 9 17/05/2004 Variable costs Direct labour costs Non manufacturing variable costs Total variable manufacturing costs Direct material costs Total Variable costs + = += + + Energy costs Other variable manufacturing costs

10 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 10 17/05/2004 Full costing and direct costing Direct costing Direct costing revenues - Variable costs of products sold = Total contribution margin - Fixed costs = Net operating margin Full costing Full costing revenues - Cost of sales = Gross margin - Non manufacturing costs = Net operating margin Cost of sales = full manufactring costs of products actually sold Variable costs of products sold = total variable cost of products actually sold

11 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 11 17/05/2004 Cost allocation many different methodologies can be used to calculate the cost of a definite product / function. The main difference among them refers to the allocation of the indirect costs, i.e. the criterium used to allocate a part of an indirect cost, to a specific product/function. Allocation of indirect costs: 1. identify the indirect cost to be allocated to the specific cost object 2. select the cost allocation base to be used in assigning the indirect cost to the object cost 3. calculate the coefficient of allocation as total indirect cost / Total quantity of cost allocation base

12 Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 12 17/05/2004 !Q = indirect cost !S = S i total value of the allocation base (total consumption of the allocation base made by all products) !Q i = indirect cost allocated to the specific product i !K = coefficient of allocation K = Q/S Q i = K * S i Indirect cost allocation


Download ppt "Raffaella Manzini e Valentina LazzarottiIl calcolo dei costi 1 17/05/2004 Economic techniques for MCS External accounting and Ratio analysis Cost accounting."

Similar presentations


Ads by Google