EKC 451

Engineering Economic Analysis

Economic Evaluations

To determine if it is economically and financially feasible Proceeds in several steps

1. 2. 3. 4. 5. 6. 7.

Preparing a process flow diagram Calculate mass and enegy flows Sizing major equipment Estimating the capital cost Estimating the production cost Forecasting the product sales price Estimating the return of investment

Cash Flow

Cash flow = (cash receipts cash payment) / period of time Cash flow = net profit + anounts charged off for depreciation and amortization Cash flow a measurement of a companys financial health Cash flow statement:

Operating activities Investing activities Financing activities

Cash Flow
acquires capital profits earned by several existing divisions of the company, sale of bonds and stock, borrowed funds from banks and other organizations, income from licensing processes to other firms, various services to other firms, and return on investments obtained from other organizations.

Cash Flow

dispense funds payments of loans, Purchase of stock, dividend payments, investments in other organizations, funds for a new plant, plant expansion, improvements made on existing operations.

Cash Flow

provides funds sales of products return on investments for existing operations, such as a division of the corporation

Cash Flow in a corporation

Management of an organization

Cash Flow Statement