How much will our money be worth in the future? Calculating the future and present value of the cash flow is a complex mathematical process. Today it’s easy, because Excel has a class of functions that only deal with this area. Sometimes, in order to facilitate the assessment of the justification of the investment, the so-called “Financial tables” containing discount rates were used to calculate values for the given interest rates and time periods.
Many companies that have excellent sales results are bankrupt because they do not have enough cash! Therefore, it is necessary to plan and monitor cash flows. This is not always easy, but with an experienced accountant and defined contracts with buyers and suppliers, it is possible to create a plan that allows us to track inflows and cash outflows and, based on this, we can have a better insight into the business.
Marginal costs in the economy are those generated by the production of an additional product unit, while in accounting they correspond to the average variable costs. By distinguishing between variable and fixed marginal costs, we can easily calculate whether to accept a special order or to discard the product. Let’s see it on the case of profitability of production under the private label.
The customer’s lifetime is the period in which we perform sales transactions, and the calculation of its value is a profit forecast based on the relationships that are mutually achievable. There are several ways to calculate it, and all of them show us profit flow that we can expect by retaining a customer. In other words, how much money comes if they pay regularly, if they are financed, and if a certain percentage of customers goes from year to year.
Excel has built-in functionality that allows automatic error checking when entering values in cells. Where he recognizes or finds error, a small green triangle in the upper left corner of the cell and a warning icon (a yellow diamond with an exclamation point) will appear. If you click on the icon then a menu will open that explains why the error occurred and offers a way to overcome it.