Series

Talking to Your Bo$$—The Economics of Engineering

With lots and lots of business topics open for discussion, this series will focus on Engineering Economics. It will help answer questions you’ve heard your boss ask, such as: How much will it cost? What will our savings be? Can you show me the cost/benefit analysis? What is the budget for that project?

October 19th, 2010

Talking to Your Bo$$ – The Basics of Economics Engineering [Introduction]

By Teresa Jurgens-Kowal | Comments (4)
boss_sitting_at_desk
This entry is part 1 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

Have you ever noticed that your boss uses a lot of phrases like the following?

* How much will it cost?
* What will our savings be?
* Show me the cost/benefit analysis.
* What is the budget for that project?

Yes, I know that your project has some really awesome technology and that you’ve got armloads of data sliced, diced, and statistically analyzed to the nth degree. You’ve sketched PFDs (Process Flow Diagrams) and created both kinetic AND thermodynamic models. But, there he sits across the desk, daring to ask seemingly trivial MONEY questions!

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October 26th, 2010

Talking to Your Bo$$- Time Value of Money

By Teresa Jurgens-Kowal | Comments (2)
bird in hand
This entry is part 2 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

Part II – Time Value of Money

You’ve probably heard the phrase “A bird in the hand is worth two in the bush.” In economic terms, this old adage translates to “A dollar today is worth more than a dollar in the future.” Clearly, then the value of money must […]

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November 23rd, 2010

Talking to Your Bo$$: Cash Flow Statements

By Teresa Jurgens-Kowal | Comments (0)
women calculating
This entry is part 2 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

In the last few posts, we’ve talked about various Financial Statements that companies are required by law to prepare and share with stockholders and government agencies. Your bo$$, of course, shows sensitivity to operating and production costs because he or she wants these Financial Statements to be favorable. In particular, in the last blog, we discussed Income Statements at length.

Do you think if a company shows a positive Net Income that they are free of all financial trouble?

A Cash Flow Statement, like the Income Statement, shows changes in money flow during a specific period of time: a month, quarter, or year, for example. (You’ll recall from an earlier post that the Balance Sheet is a snapshot in time, showing a “material balance” of Assets against Liabilities.) Cash Flow is easy to calculate.

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November 2nd, 2010

Talking to Your Bo$$- Financial Statements (The Balance Sheet)

By Teresa Jurgens-Kowal | Comments (0)
balance
This entry is part 3 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

The cornerstone of a public company’s financial success is the annual report. Wall Street investors, stockholders, executives, and employees are all interested in periodic reports that present a snapshot view of the financial health of the organization, as well as trends of growth or improvement over time. Since these periodic reports tend to drive stock prices up or down, and since your boss’ bonus is based on the value of the company’s stock, he or she is of course interested in how your project will contribute to the bottom line!

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November 29th, 2010

Talking to Your Bo$$: Operating Costs

By Teresa Jurgens-Kowal | Comments (0)
R
This entry is part 3 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

If you’re a chemical engineer and want to discuss operating costs intelligently with your boss, you’ll need to understand a number of financial concepts, including gross margin, cost of goods, depreciation, allocation, and capital investment.

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November 16th, 2010

Talking to Your Bo$$: Financial Statements (Income Statements)

By Teresa Jurgens-Kowal | Comments (5)
gas pump
This entry is part 4 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

Income Statements are often presented in many different formats. Two popular methods are the Traditional Income Statement, which is required by U.S. law for reporting to governments and stockholders, and the Contribution Margin Income Statement, which is used internally to help guide management decisions. Also, you will want to analyze the Income Statement both horizontally and vertically.

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December 8th, 2010

Talking to Your Bo$$: Inventory

By Teresa Jurgens-Kowal | Comments (0)
Clerk_inventory
This entry is part 4 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

Why does your bo$$ talk about things like inventory control when he asks you about operating costs? Inventory is the aggregate of items that are either held for sale in the ordinary course of business, in the process of production for sale, or currently consumed in the production of goods or services to be available for sale in the future.

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December 15th, 2010

Talking to Your Bo$$: Taxes and Conclusion

By Teresa Jurgens-Kowal | Comments (5)
Benjamin_Franklin_Portrait
This entry is part 5 of 8 in the series Talking to Your Bo$$—The Economics of Engineering

Tax decisions can affect chemical engineers as they take their projects from the lab to the field. Learn more about how you can learn to make wise tax-related decisions that will please your boss and bolster your project’s success.

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