What if Analyis, Solver & Goal Seeker
I make extensive use of Excel’s tools to provide financial analysis.
- Solver uses techniques from the operations research to find optimal solutions for all kind of decision problems.
- What-If Analysis in Excel allows you to try out different values (scenarios) for formulas.
- Goal Seek is a built-in Excel tool that allows you to see how one data item in a formula impacts another. You might look at these as “cause and effect” scenarios.
I have 6 years of manufacturing experience. Steel prices can be volatile, remember the tariffs? I’m adept at using @IRR, @NPV, @Lookup’s and many other formulas.
In conclusion, what the hammer is to the carpenter, excel is to the MBA Financial professional.
Business Financial Services
Helping organizations navigate a variety of risks to lead in the marketplace and disrupt through innovation. In English, I’m talking about integrating business development with your forecasts and budgets.
Many business ask why they should create a budget or a forecast. If you google the question, you’ll find some gibberish about a budget being the steering wheel and a forecast being the brakes and the gas. The truth is you need to create budgets and forecasts for being able to make critical business decisions quickly. Let’s face it, today, nothing is certain anymore except change itself. The key difference between a budget and a forecast is that the budget is a plan for where a business wants to go, while a forecast is the indication of where it is actually going. I offer virtual CFO services so that your organization has a cornucopia of tools to handle itself and even thrive in adversity.
There is no denying that technologies, such as cloud computing, robotic process automation, and analytics tools promise to revolutionize finance and improve performance. But while automation is likely to replace some workers in repetitive task jobs, such as those in accounts receivable/payable and invoicing, not every current position is scheduled for extinction. Instead, the new tools will transform many positions within organization, likely requiring mangers to demonstrate more strategic and analytical skills.
Capital budgeting and lower tax rates
Lower business rates means that capital budgeting is more important than ever. Before the 2017 tax act you knew that the write off was worth 40-45%. Today it’s 20-26%, depending on what jurisdiction your in. Also the lower rate is dependent on how labor intensive your business is.
The short answer is to give a project the green light you should have more reliable cash flow, otherwise use the funds for other financing purposes such as paying the owners.
Depreciation Calculator Notes: MACRS Tax Depreciation
The Internal Revenue Services uses MACRS
The IRS uses the Modified Accelerated Cost Recovery System, otherwise known as MACRS. Mofified Acclerated Cost Recover System or MACRS starts the caclulation with double declining balance and switches to straight line. Double declining balance is 200% of the declining balance method. The switch occurs when straight line depreciation is greater than the amount for double declining balance. Therefore, the depreciation calculator doesn’t calculate tax depreciation expense. However, you can make modifications to get tax depreciation. Call me at 954-686-6250 if you have any questions.
How to get MACRS or Tax Depreciation
When using the Double Declining Balance method for depreciation, a switch to the Straight-Line method typically occurs when Straight-Line results in a larger expense than Double Declining Balance for the remaining asset value. This usually happens because DDB emphasizes heavier depreciation in the earlier years, while SL provides a consistent expense throughout the asset’s useful life.
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How to Determine the Switch Point
- Calculate Annual Depreciation: Compute annual depreciation using both the Double Declining Balance and Straight-Line methods.
- Monitor Yearly Amounts: During each year, compare the depreciation expense calculated by the DDB method with the expense that would result from switching to the Straight-Line method.
- Switch When SL Is Greater: When the depreciation expense under the Straight-Line method for the remaining useful life becomes greater than the expense using DDB, switch to Straight-Line for the rest of the asset’s life.
In summary, the switch occurs at the point where the remaining book value divided by the remaining life (Straight-Line) exceeds the depreciation expense calculated using the DDB method. This ensures the asset is fully depreciated by the end of its useful life
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David Weinstein MBA CPA CFE
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