Contents

Acknowledgments

Introduction

Chapter 1    Blue Pill or Red Pill?

So What?

Chapter 2    The Foundation

Generating Cash

Reporting Earnings

Chapter 3    Profit has Little to do with Making Money

Revenue Recognition

The Practice of Costing

Cost Definitions

Efficiency

Inventory

Depreciation

Chapter 4    Revenue Recognition

Chapter 5    The Practice of Costing

Chapter 6    Cost Definitions

Calculated Costs

The Numbers Aren’t Financial

Chapter 7    Understanding Efficiency

Chapter 8    Inventory

Chapter 9    Depreciation

Chapter 10  Revisiting the Objective—Cash and Decision-Making

Forced Relationships

Losing Track of Relationships

Meaningless Numbers

No Single Cost

Arbitrary Relationships

No Ties to Cash Flow

Chapter 11  Transactions and Capacity

Capacity

One-off Scenarios

Obligations

Chapter 12  Input Capacity

Cash Transactions

Cost Determined by What is Purchased

The Cost is Independent of Use

Chapter 13  Output Capacity

Consuming Input

There is No Cash Transaction

Chapter 14  Understanding the Basics of Capacity Dynamics

Efficiency

Effectiveness

Productivity

Chapter 15  Understanding the Cost Dynamics of Capacity

Purposeful Allocation Techniques

Less Purposeful

Conclusion

Chapter 16  Do You Need Accounting?

Hindsight

Data in Foresight

Chapter 17  Getting Managerial Information from Capacity

Modeling

Models Operations More Effectively

Serves as an Intersection between Operations and Accounting

Chapter 18  Explicit Cost Dynamics Revisited

Complicated

Did not Push the Idea

Immature Understanding

Chapter 19  What is Explicit Cost Dynamics?

Contribution Margins and Fixed versus Variable Costs

Focusing on Cash Using Capacity

Chapter 20  Worth

Understanding Worth

Explicit Cost Dynamics

Worth

Efficiency

Chapter 21  The Red Pill

Dynamics of Profit

Cost Reduction

Improved Investment

Appendix A

Appendix B

Index

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