Finance and Accounting for Energy Engineers: & Engineers in All Disciplines

Description

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. 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