Calculating Economic Efficiency

Peter Eichhorn and Ian Towers
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Peter Eichhorn: OPINIO Forschungsinstitut
Ian Towers: SRH Hochschule Berlin

Chapter 7 in Principles of Management, 2018, pp 221-241 from Springer

Abstract: Abstract The chapter begins with a discussion of ratios, which are essential for management activities, as they make planning, implementation and supervision easier. There are three types of ratio: classification figures, relationship figures and indexes. Not everything can be captured in numbers, which is where different kinds of performance indicators play a role. There are two main types of calculation methods used in capital budgetin Budgeting g—static and dynamic. Capital budgetingCapital budgeting is involved in investment decisionsDecision . Cost comparison, profit comparison, profitabilityProfitability and payback calculations are examples of static calculations, while the present valuePresent value method and internal rate of returnInternal rate of return method are dynamic calculations. Various tools are presented for optimisation, including linear programmingLinear programming . Forecasting is an essential business activity and tools such as time-series analysisTime-series analysis and regression analysis are described.

Keywords: Present valuePresent Value; Payback Calculations; Profit Comparison; Internal Return Rate; Cost Comparison Method (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/978-3-319-70902-4_7

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