1: What is a cash flow diagram? What is its purpose and provide examples of how it might be used?
Cash flow diagrams in project management are used to graphically represent money going out and money coming in. The diagram itself is usually a simple horizontal line diagram with line markers representing cash flow during a certain duration. This can include initial investment, projected profits, maintenance costs, cash expenses and even salvage value for leftover material or equipment. A cash flow diagram may display a break-even point within the project and subsequently a point of profitability. An example could be a cash flow diagram for a Bulldozer for a construction company. The diagram would show negative or downward markers for cash going out to represent the initial investment at the beginning of the diagram which would be the cost of the bulldozer itself. Then it would show subsequent downward markers to represent maintenances cost per year for every year until the bulldozer reaches its useful life then will display a final positive or upward marker for cash coming in to represent positive cashflow for salvage vale of bulldozer.
2: What are the major concerns involved within equipment ownership?
One of the major concerns with owning equipment would be depreciation. Mechanical equipment depreciates and eventually reaches a point where its only value is salvage value which is usually a fraction of its original cost. Owners must consider if it is beneficial (profitable) to purchase equipment as opposed to leasing equipment after considering depreciation over the period of the equipments useful life. Another major concern is the maintenance cost of the equipment itself. If a company has onsite technicians that can service and maintain equipment, that might be much more cost effective than having a third party perform the same services. In conclusion it is up to the owner(s) ultimately decide if the decision to purchase equipment is a feasible one.
"Place your order now for a similar assignment and have exceptional work written by our team of experts, guaranteeing you A results."