The purpose of this second edition is to provide an overview of important principles in the fields of finance and accounting, and the application of those principles for financial analysis of energy and non-energy capital investments. This book is written as a self-study guide for energy and non-energy engineers and managers who either lack formal training in the subjects of finance, accounting, and engineering economics, or simply need a means to refresh their knowledge in these subjects. This book bridges the gap between the typical business school "MBA" knowledge and its application in enery and non-engergy engineering, project management or manufacturing management. Many energy and non-energy engineers and technical managers feel inadequately equipped to comprehend and apply certain important finance and accounting principles. Understanding of finance and accounting principles is important in interfacing and conducting business with accountants, financial analysts, and members of upper management. This book is designed to familiarize energy engineers and other engineering professionals - in a relatively simple and easy to understand fashion - with decision making skills founded on financial calculations and case study based quantitative analysis.
Author(s): S. Bobby Rauf
Series: River Publishers Series in Energy Management
Edition: 2
Publisher: River Publishers
Year: 2023
Language: English
Pages: 302
City: Aalborg
Cover
Half Title
Series Page
Title Page
Copyright Page
Dedication
Table of Contents
Preface
List of Figures
List of Tables
List of Abbreviations
Chapter 1: Finance, Accounting, Associated Definitions, Concepts, and Organizational Structures
1.1: Introduction
1.2: Organizational Structures and Components
1.2.1: Cost center
1.2.2: Profit center
1.3: Types of Organizational Structures
Chapter 1—Self-assessment Problems and Questions
Chapter 2: Breakeven Analysis, Concepts, and Case Studies
2.1: Introduction
2.2: Breakeven Point, Mathematical Definition, and Analysis
2.3: Case Study 2-1. Graphical Illustration and Computation of Breakeven Point
Chapter 2—Self-assessment Problems and Questions
Chapter 3: Energy and Non-energy Engineering Economics – Time Value of Money-based Analysis of Energy Project Investments, Revenues, Savings and Costs
3.1: Time Value of Money, TVM
3.2: Methods and Tools for Time Value of Money Calculations
3.3: Important Time Value of Money Concepts – Explanation and Application of Financial Formulas and Derivative Financial
Factors
3.3.1: Future value, F
3.3.2: Financial factor method
3.3.3: Present value, P
3.3.4: Financial factor method
3.3.5: Annuity, A
3.4: Conversion of Future Value to Annuity
3.5: Conversion of Annuity to Future Value
3.6: Conversion of Present Value to Annuity
3.7: Conversion of Annuity to Present Value
3.8: Case Study 3.1. Project and Investment Decision Based on TVM Analysis
3.8.1: Ancillary to the Case Study 3.1
3.9: Conversion of Gradient Value to Present Value, Future Value and Annuity
3.10: Case Study 3.2. Positive and Negative Gradient Cash Flow, DSM Project
3.11: EUAC: A Decision-Making Tool for Energy Projects
3.12: Case Study 3.3. EUAC Based Decision Between Competing Energy Projects A and B
3.13: Compounding vs. Simple Interest
Chapter 3—Self-assessment Problems and Questions
Chapter 4: Financial Reporting Requirements, 10-K, 10-Q, and 8-K
4.1: Introduction
4.2: 8-K Reports
4.3: 10-K Reports
4.4: Results of Operations
4.4.1: Consolidated Operating Revenues
4.4.2: Consolidated Operating Expenses
4.4.3: Consolidated Gains (Losses) on Sales of Other Assets and Other, net
4.4.4: Consolidated Operating Income
4.4.5: Consolidated Other Income and Expenses
4.5: 10-Q Report
Chapter 4—Self-assessment Problems and Questions
Chapter 5: Income Statements and Balance Sheets, Cash Flow and Working Capital, Concepts and Analysis
5.1: Introduction
5.2: Income Statement
5.3: Balance Sheet
5.4: Case Study 5.1. ABC Corp. Financial Statements
5.5: Financial Statements Example in the Energy Industry
Chapter 5—Self-assessment Problems and Questions
Chapter 6: Financial Metrics and Ratios
6.1: Introduction
6.2: Net Present Value, NPV
6.3: Payback Period
6.4: Return on Investment, ROI
6.5: Rate of Return, ROR
6.6: Return on Equity, ROE
6.7: Internal Rate of Return, Irr
6.8: Case Study 6.1. Energy Project – Equipment Replacement:
6.9: Working Capital
6.10: Current Ratio
6.11: Acid Test Ratio
6.12: Plant Turnover Ratio
6.13: Inventory Turnover Ratio
6.14: Debt to Equity Ratio
Chapter 6—Self-assessment Problems and Questions
Chapter 7: Depreciation Alternatives, S/L, Double Declining Balance, SOY Digits, Statutory Depreciation Methods, Concepts and Analysis
7.1: Introduction
7.2: Depreciation Basis of an Asset
7.3: Purchase Price or Total Initial Cost
7.4: Book Value
7.5: Straight Line (S/L) Method
7.6: Sum-of-the-Years’ Digit (SOYD) Method
7.7: Double Declining Balance Method
7.8: Statutory Depreciation Systems
7.9: Depreciation Method Selection
Chapter 7—Self-assessment Problems and Questions
Chapter 8: Inventory Concepts, FIFO, LIFO, EOQ, Inventory Order Cycle, WIP Inventory, Inventory Carrying Costs, Ordering Costs, Concepts and Analysis
8.1: Introduction
8.2: Carrying Cost
8.3: Shortage and Stock-out Costs
8.4: Inventory Control Systems
8.5: Economic Order Quantity Model, EOQ
8.6: Inventory-Based Costing Techniques
8.7: Work-In-Process, WIP, Inventories
8.8: Just In Time, JIT
8.9: Inventory Turnover Ratio
8.10: Case Study 8.1. Coal-fired Electric Power Generating Plant Inventory Optimization
Chapter 8—Self-assessment Problems and Questions
Chapter 9: Electric and Gas Bill Schedules, Calculations, and Analysis
9.1: Introduction
9.2: Electric Rate Schedules
9.3: Commercial and Industrial Natural Gas Rate Schedules
9.4: Residential Electric Bill
9.5: Case Study 9.1. Residential Bill Calculation
9.6: Gas Bill – Commercial Consumer
9.7: Case Study 9.2. Gas Bill Calculation
9.8: Large Industrial Electric Rate Schedule
9.9: Case Study 9.3. Electrical Power Bill – Large Industrial Power Consumer on Duke Energy Grid
Chapter 9—Self-assessment Problems and Questions
Chapter 10 Types of Cost, Life Cycle Cost and Repair versus Replace Decisions and Analysis
10.1: Introduction
10.2: Cost Examples
10.3: Life Cycle Cost and Repair vs. Replace Decisions
10.3.1: Lifecycle cost
10.4: Case Study 10.1. Making a Decision between Two (2) Alternatives, Based on Life-Cycle Cost, Without
Consideration of Time Value of Money
10.5: Case Study 10.2. Making a Decision between Two (2) Alternatives, Based on Life Cycle Cost, with Consideration
of Time Value of Money
Chapter 10—Self-assessment Problems and Questions
Chapter 11 EPC, Energy Performance Contracting and ESCO’s – Business, Economic, and Financial Perspective; Comparison of Lease and Capital Investment Alternatives
11.1: Introduction and Brief History of EPC and ESCO’s
11.2: Industry Revenues Segmentation by Project Type or Measures Undertaken
11.3: ESCO Market Segment Comparison on the Basis of Segment Revenue
11.4: Marketing and Business Perspective, EPC and ESCO
11.5: EPC Financing Perspective
11.6: EPC Measurement and Verification Consideration
11.7: Case Studies
11.7.1: Case Study 11.1. Demand side management, demand elasticity and electricity price reduction
11.8: Introduction to Case Studies 11.2 and 11.3
11.9: Case Study 11.2. HAR Energy Project
11.10: Financial Analysis of Investment on Energy/Utility Project without EPC-ESCO Approach - with Loan
11.11: Case Study 11.3. EPC - ESCO Projects
Chapter 11—Self-assessment Problems and Questions
Appendix A
Appendix B
Appendix C
Index
About the Author
