This is a textbook on construction financial management written in simple English for undergraduate students who study construction related programmes. It is also suitable for postgraduate students (as a bridging course) who know construction technology well but are less familiar with financial management. Readers, after studying this book, will have a very good understanding on income statement, balance sheet, NPV (net present value), IRR (internal rate of return), and so on. They will be able to analyze the financial statements of a company and perform the financial analysis of a project proposal. Other related topics such as break-even analysis, S-Curve and working capital financing of a project are also discussed in this book.
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- Financial Statements – Income Statement and Balance Sheet
- Introduction
- Income Statement
- Balance Sheet
- Working Capital and Current Ratio
- Under Billing and Over Billing
- Worked Examples
- Financial Statement Analysis of a Construction Company
- Analysis of Financial Statements by Financial Ratios
- Five Categories of Financial Ratios
- A Case Study
- Compound Interest, Net Present Value (NPV), Equivalent Annual Cost and Loan Redemption
- Nominal Interest Rate and Real Interest Rate
- Compound Interest Calculations
- Benefit-Cost Ratio
- Salvage Value and Equivalent Annual Cost
- Redeeming a Loan
- Principal Amortization and Interest Payment of a Loan
- Internal Rate of Return (IRR) and the Differences between IRR and NPV
- Net Cash Flow (NCF)
- DCF Method and IRR
- IRR versus NPV
- IRR as Financial Indicator and NPV as Economic Indicator
- Effect of Inflation
- Introduction
- Real IRR and Its Calculation in a World with Inflation
- When Is Inflation Adjustment Considered Or Not Considered?
- Concluding Remarks
- Cost-Volume-Profit Analysis
- Introduction
- Variable Costs, Fixed Costs and Break-even Point
- Graphical Presentation – Break-even Chart
- Mathematical Presentation
- Contribution
- The Make-or-Buy Decision
- Equipment Selection Decision
- Engineering Scheme Choice Decision
- Concluding Remarks
- Financial Analysis of a Project
- Introduction
- Basic Method of Financial Analysis
- A Case Study on Financial Analysis
- S-Curve and Working Capital Financing of a Construction Project
- Introduction
- S-Curve
- Cumulative Interim Payment Graph
- The Two Graphs combined
- A Worked Example
- Appendix
- Endnotes
It is a great tool that provides information on business management.
