Capacity Planning and Financial Appraisal Essay

Capacity Planning and Financial Appraisal - Essay Example 3. The utilization of the workcentres is assumed to be 100%. This assumption ignores any machine downtime for various reasons such as breakdown, power failure, lack of materials or labour, and planned maintenance. (Vorne industries, 2008) However, the actual number of machines planned for procurement is higher than the calculated number by a substantial amount in the case of each type of workcentre. This has occurred partly due to rounding off of fractional requirements. Where the rounding off involved marginal increases, as in the case of Workcentres A and C, the rounding off has been carried over to the next higher figure. Because of this, there is enough in-built cushion in the calculated figure to take care of lower utilization. 4. Interference or waiting times have been assumed to be zero. Interference and waiting times can arise because of unbalanced line in which some of the machines have less capacity than others causing a pile up at these centres. Waiting times can also occur when disparate products are being scheduled one at a time, and the schedules fail to take care of piling of jobs at the same time at a workcentre, causing some of the parts/products to wait. In the present case, there is a continuous production of five different products with the same processing times. Although this could lead to scheduling problems because of changeover from one product to another, in this particular case, it is unlikely to happen because all products take the same time to process. Moreover, there is sufficient cushion available in the capacities due to rounding off, to take care of any waiting time. The financial viability of the new plant is to be checked using the IRR method. The Operations Director (OD) has set a criterion for selection of projects based on the IRR of the project. According to this criterion, projects having an IRR of more than 30% are to be

International Financing Reporting Standards Research Paper

International Financing Reporting Standards - Research Paper Example Although the US is yet to follow suit, there is a growing enthusiasm towards their adoption by the SEC. Such a move will concequently make it mandatory for the organizations to report using these standards. Currently, efforts are underway to implement the international financial reporting standards in the US accounting field. This is in appreciation of the importance of these standards in cushioning global firms in times of economic hardships. Adopting such standards will undoubtedly assist firms in reducing costs associated with financial reporting since the standards are globally acceptable. This will also enhance transparency in financial reporting as well as offer a standard comparison platform on performance. In addition, it will reduce the time taken by most multinational organizations in reporting their financials. Investors will also benefit from this development since information about performance of companies will be available to them in similar standards. This paper seeks to show how effects of globalization and increased market interdependence necessitate the need for all countries to have common reporting standards. In addition, the paper will outline the financial benefits associated with a common reporting standard in the context of international business. Reasons for the adoption of the IFRS by SEC Unification of the world reporting standards Poon (2012) observes that in 2010, the SEC took a stand on the adoption of the IFRS in the US. Citing the advantages of the use of the IFRS for the United States firms, the SEC decided to embark on a plan to ensure that all organizations in the United States adopt the IFRS. The unification of the reporting standards seeks to put the United States in the same accounting standards as the rest of the world. According to Erchinger& Melcher (2007), the world’s capital markets are likely to gain from the convergence of the world financial reporting standards. The quality applied while drafting these standa rds, their comprehensive nature, and the extent of their application are the main reasons why the world hopes to benefit from these standards (Erchinger& Melcher 2007). SEC in determined efforts to protect the interests of the United States investors sought to implement these standards amid stiff objections by some firms. The first attempts to reconcile the standards of the IFRS with America’s GAAPs in 2007, focused on changing the SEC’s policies so as to accommodate the adoption of the IFRS (Erchinger& Melcher, 2007). Preventing investors in economic crisis In the last decade, the American economy suffered one of the worst economic crises ever in its history. The financial sector being the worst hit sector of the economy showed the laxity of the various state agencies in implementing the policies of the country. Several financial organizations in the country were almost shut down while those that survived were faced by a myriad of problems. This crisis helped reveal a number of problems in the financial management in both the public and sector. These problems were closely