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Asset Management and Revenue Analysis

1) The document appears to be analyzing the accounting treatment of assets and how it affects key financial metrics like income, cash flow, and return on assets under both capitalization and expense methods. 2) It shows the revenue, depreciation, book value, and other financial impacts over 9 years from operating assets under different capitalization and expense scenarios. 3) The graphs at the end compare the income, cash flow from operations, and return on assets between capitalizing versus expensing assets over the 9 year period.

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2 views2 pages

Asset Management and Revenue Analysis

1) The document appears to be analyzing the accounting treatment of assets and how it affects key financial metrics like income, cash flow, and return on assets under both capitalization and expense methods. 2) It shows the revenue, depreciation, book value, and other financial impacts over 9 years from operating assets under different capitalization and expense scenarios. 3) The graphs at the end compare the income, cash flow from operations, and return on assets between capitalizing versus expensing assets over the 9 year period.

Uploaded by

Pratheep Gs
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

1 of 2

100127

Chapter 7: Pages 230, corrections and explanations


New asset cost
Revenue per asset per year
June 30
V
Buy
30
20
10

Revenue
Depreciation

Income
Book value of asset

Example for LL Assets Revised

120
60

Dec 31

Other Asset Base


Other Income

Dec 31

1,000
150

Dec 31

60
40
20

June 30
V
Retire
30
20
10

60
40
20

100

60

20

CAPitalize

EXPense

CAP: Income

CAP: ROA

EXP: CFO=Income

EXP: ROA

Bigger Income?

Bigger ROA ?

4
2
5

CFI

100
240
200
540

CAP: CFO

20
60
100

Book Value, End

x
x
x

Total Depcn Expense

5
4
2

1,000
1,500
1,700
1,540 100
1,700 80
1,740 40
1,540 100
1,700 80
1,740 40

1st year asset

Total Revenue
300
570
750
810
810
810
810
810
810

2nd year asset

Revenue from assets


150
420
600
660
660
660
660
660
660

Exp

3rd year asset

# of operating Assets
2.5
7.0
10.0
11.0
11.0
11.0
11.0
11.0
11.0

4rd year asset

Purchase

5
4
2
5
4
2

5
4
2
5
4
2
5
4
2

5
4
2

Beginning Assets

Replace

1
2
3
4
5
6
7
8
9

Growth

Year

Depreciation

200
160
80
200
160
80
200

200
160
80
200
160
80
200
160

100
80
40
100
80
40
100
80
40

100
280
400
440
440
440
440
440
440

1,500
1,700
1,540
1,700
1,740
1,540
1,700
1,740
1,540

300
570
750
810
810
810
810
810
810

(600)
(480)
(240)
(600)
(480)
(240)
(600)
(480)
(240)

200
290
350
370
370
370
370
370
370

18.1%
21.6%
22.8%
21.5%
22.6%
22.8%
21.5%
22.6%

(300)
90
510
210
330
570
210
330
570

9%
51%
21%
33%
57%
21%
33%
57%

Cap
Exp
Cap
Cap
Exp
Cap
Cap
Exp

Cap
Exp
Cap
Exp
Exp
Cap
Exp
Exp

x
x
x

20
60
100

80
120
500
700

2 of 2

Example for LL Assets Revised

1,000
800
600
400
200
0

CAP: Income

(200)

EXP: CFO=Income
(400)

CAP: CFO

60.0%

CAP: ROA
EXP: ROA

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
1

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