...Revenue and capital expenditure are aspects of business management that seem very similar at first. Both revenue and capital expenditure are purely focused on the process of spending money to help a business survive and grow. The key difference between the two is the intention of the expenses and the direction of the money flow. Revenue is for short-term costs that are not used afterwards to make the company grow, such as repairs which are most common. Capital expenditure is for assets that are considered or categorized long-term, such as new vehicles or software, which will be used to make the company stronger. Revenue expenditure is money being spent immediately and exclusively for short-term purposes. These are expenses associated with profit-producing assets, such as repair, that may or may not increase the life of the given asset. Revenue expenditure is more often associated with day-to-day costs the company accrues through its life cycle. Capital expenditure is money is being spent on assets that will increase the company’s ability to pull in profit or operate at a higher performance level. New software technology, vehicles, machinery and tools that will be used for at least 12 months are considered capital expenditure. Capital expenditure, unlike revenue, is looked at more as an investment than a cost, because it is being used to strengthen the company so it can do better business. When purchasing a capital asset, a business either will spread the cost out over the asset’s...
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...Comparing Capital Expenditures In certain industries there are clear leaders. For example, Wal-Mart is a clear leader in the retail industry and Google is a clear leader in search engines. But with smaller companies find ways to thrive in those giant’s shadows. Competition in the coffee industry is hard to distinguish at times, but Starbucks is a brand name that stands out on its own. Coffee competitors have done a good job of differentiating themselves by using environments and product mix. Coffee is the second largest U.S. import, and specialty coffee is forecasted to be an $11 billion dollar a year industry. In order to strive in this industry, companies must have the appropriate buildings, properties and equipment. Capital Expenditures are the cash that is used to buy, revamp or upgrade these physical assets. Capital expenditures are forecasted using CapEx % of gross profits and are allocated proportionally to each division based on the gross margin. This paper will compare the capital expenditures of Dunkin Brands and the Starbucks Corporation (Fig.1). Direct Competitor Comparison SBUX DNKN Market Cap: 49.50B 4.42B Employees: 160,000 1,104 Qtrly Rev Growth (yoy): 0.11 0.06 Revenue (ttm): 14.02B 667.67M Gross Margin (ttm): 0.57 0.79 EBITDA (ttm): 2.59B 313.12M Operating Margin (ttm): 0.14 0.39 Net Income (ttm): 1.51B 106.11M EPS (ttm): 1.97 0.94 P/E (ttm): 33.59 44.29 PEG (5 yr expected): 1.61 1.72 P/S (ttm): 3.47 6...
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...Comparing Walmart and Target Capital Expenditures University Comparing Walmart and Target Capital Expenditures In every business there is always a need for capital expenditures. Capital Expenditures can be very beneficial and can also differentiate the numbers from rival companies. According to readings “capital expenses are extensive and mostly hold a company’s substantial amount of money. Companies invest in prime property, plant, machinery, buildings and other forms of fixed assets, which also act as securities for the company. I chose to look up the Capital Expenditures of two companies that are known in many households: Walmart and Target. The annual report of mutually businesses over the past three years will be examined. This paper will examine and compare the reports and the amount of capital spending over the past three years while defining how the amount of capital spending remains constant or if it’s altered. Capital expenditures can determine the major financial decisions that a company must make in order to acquire a sound investment. This paper will attempt to expand on the clarification of capital expenditure and the impact it can have on the organization’s debt capacities and capital structures. As stated by Byrd and associates in the text, there should be a comparison of the level of capital spending across the two firms. The paper will further point out how the spending was similar and/or different and speculate why the similarities or differences might...
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...Comparing Capital Expenditure for NBG and INVESCO Name: Course: Number: As defined by Hitchner, & Mard, (2003), capital expenditure is a cost that is incurred today for future benefits realization. Today’s capital expenditures create a difference in the company’s future status depending on the company’s strategies and resolutions. Capital expenditures are extensive and in most case, they will hold most of the company’s money. At one point in time, companies will invest in plant machinery, buildings, prime property, or any other form of fixed assets. Despite having the stage at which any company will have to incur capital expenditure, these capital expenses will vary depending on the industry the company is operating in, its operations, and the size of the company. Despite being closely related to the capital assets, capital expenses also relate to the maintenance cost of the already acquired assets (Hitchner, & Mard, 2003). The paper will analyze the capital expenditures of INVESCO and National Bank of Greece (NBG) companies by providing the differences and similarities of their capital expenditures. The analysis of the capital expenditure for the two companies will be between 2011 and 2013 financial years. The National Bank of Greece (NBG) The NBG is a global financial organization with well-established branches in various countries including the United States of America. NBG offers financial products and services to their clients ranging from those of individuals...
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...Surgery Unit Director who is getting ready to prepare a capital expenditure funding program for the coming year. His unit is too small and is running at over 90% capacity, so Ted wants more room. On the other hand, a cardiology surgeon at the hospital wants to create a new cardiac surgery program that would require extensive funding for new state-of-the-art equipment. Therefore, the surgeon has been campaigning with the hospital board members (Baker & Baker, 2011). Furthermore, Ted will need valuable information and will need to have a great strategy to prepare the capital expenditure funding program. Baker & Baker (2011) explains, “Capital expenditures involve the acquisition of assets that are long lasting, such as equipment, buildings, and land. Therefore, capital expenditure budgets are usually intended to plan, monitor, and control long-term financial issues” (p. 177, para 1). While Ted is preparing a capital expenditure budget proposal, there are four requests he should ask for upon creating the proposal. First and foremost, Ted should compose a timeline to show when his unit will open along with justification of the need for the proposal based on firm estimates of future needs (Department of Premier and Cabinet, December 2010, p. 9). A timeline will be able to let the others see his plan more clearly. In addition, Ted should also ask for the hospital’s guidelines and criteria for preparing a capital expenditure funding program. Baker & Baker (2011) states, “Some organizations...
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...Capital and Revenue Expenditures 1 Capital and Revenue Expenditures Clarissa Jude April 24, 2015 University of Phoenix Capital and Revenue Expenditures 2 “A capital expenditure is an amount spent to acquire or improve a long-term asset such as equipment or buildings. Usually the cost is recorded in an account classified as Property, Plant and Equipment. The cost (except for the cost of land) will then be charged to depreciation expense over the useful life of the asset. A revenue expenditure is an amount that is expensed immediately—thereby being matched with revenues of the current accounting period. Routine repairs are revenue expenditures because they are charged directly to an account such as Repairs and Maintenance Expense. Even significant repairs that do not extend the life of the asset or do not improve the asset (the repairs merely return the asset back to its previous condition) are revenue expenditures.” (Wizell, John, Accounting Made Easy. 2010). This in summary means that every cost to purchase, keep up and maintain said purchase will be reported in the financial documents. The difference between capital and revenue expenditures are: Capital Expenditures | Revenue Expenditures | 1 | Its effect is long term i.e., it is not exhausted within the current account year. Its benefit is enjoyed in future year or years also. In a word, its effect is reduces gradually. | 1 | Its effect is temporary, i.e., it is exhausted...
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...daily incur revenue expenditures to upkeep their operating efficiency and productive life of an asset. Expenditures are unavoidable as well as they are very necessary to expand the business. Expenditures are payments of cash or cash equivalent for goods or services. The difference between revenue and capital expenditures is that revenue expenditures are expenses that are immediately charged against revenue as expenses. Regular and periodic repairs are revenue expenditures because they are charged directly to specific accounts. Examples of these accounts would be Repairs and Maintenance Expense. Capital expenditures are expenditures will increase the company’s investment primarily in productive facility. A capital expenditure is an amount spent to attain or improve a long term asset such as buildings or equipment. When recording capital expenditure, it is usually recorded in accounts classified or titled as Property, Plant and Equipment. Generally, because capital expenditures provide income for the company over a period of years, companies are not allowed to deduct the full cost of the asset in the year the expense is incurred. Revenue expenses typically are shorter term expenses because they always required to meet the ongoing operational costs of running a business. (Investopedia, 2015) The contrasting factor of capital and revenue expenditures is that revenue expenditures can be fully tax deducted in the same year the expense occurred. Revenue expenditures can be considered...
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...Capital Expenditures & Revenue Expenditures Veronica rowe XACC/291 Jan 29, 2014 Shontell Chrisman Capital Expenditures & Revenue Expenditures Capital expenditures; a sum spent to procure or development of a long term asset, such as buildings or equipment. Under normal accounting methods the cost is put under equipment, plant, property. Everything except the cost of land can be charged as depreciation expenditure over the useful life of the asset. Capital expenditures are put on financial report as an asset on balance sheet. Capital expenditure rewards are spread over several accounting periods. Capital expenditures can include replacement cost to delivery cost, legal charges and everything in between. Revenue expenditures; are amounts distributed out instantaneously, they match entries of the existing accounting period. Scheduled maintenance is a revenue expense, because they are charged without waiting to an account like maintenance and repairs expenditures. Major repairs do not affect the life of the asset. Revenue expenditures are put on financial report on the income statement. Revenue expenditures may include maintenance charge, repair, and renewal and everything in between. Both are classified as assets. The difference between the source of Capital and Revenue expenditures is special, because Capital is comprised of cost related to fixed assets, and Revenue expenditures affect is temporary, they come often and contains no physical presence, and does not...
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...declined post the 1st quarter in 2000, CFO Sullivan used the following accounting tactics to achieve targeted performance: 1. Accrual releases: Accounting principles require companies to estimate expected payments from line costs and match them with revenues in the income statement. Throughout 1999 and 2000, Sullivan told staff to release accruals which too high compared to the relative cash payments. Over a 7 quarter period between 1999 and 2000, Worldcom released $3.3 billion worth of accruals. 2. Expense capitalization: The above tactic could not be used by the end of 1st quarter of 2001 as few accruals were left to release. Sullivan devised a creative solution which started identifying costs of excess network capacity as capital expenditure rather than as an operating cost....
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...New Heritage Doll Company – Capital Budgeting Harvard Business School – Case 4214 The New Heritage Doll Company’s production division has been has given the responsibility of evaluating two proposals for new projects. The first project expands on a current “Match My Doll Clothing Line”, and the second involves creating a fully customized doll under the “Design Your Own Doll” proposal. Proposal Backgrounds Match My Doll Clothing Line Expansion (MMDCLE) The Match My Doll Expansion includes the further development of an already establish, successful doll line. The original line included limited outfits and accessories for warm weather only. It had become a popular line once celebrity children were photographed wearing the clothing and also when prevalent magazines showcased the items in the trendy clothing sections. The brand manager of this line has expressed her belief that this publicity will help the sales of the new “All Seasonal Collection” clothing take off. The new clothing expands the line from only warm weather apparel to clothing and accessories for all seasons. The supplier prices for the material to produce this clothing is low and will help the bottom line as selling price for the dolls/clothing can be at a premium due to the current buzz around the products. This line will also help end the seasonal sales that New Heritage has been experiencing due sales of only summer related items. The new expansion will however require high research and development...
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...after a forecast of actions and the resourcing needed in the upcoming goals set by the company. Supply budgets are normally separated into 4 separate budgets Materials (operations) purchase budget which is based on estimates of expected operations, sales forecasts and plans. The advantages of this are it identifies cash flow designations, and isolates or separates issues or problems well in advance. MRO Budget, this covers a purchase plan that normally runs in a 12 month periods. These are normally set up for maintenance, repair, and operating supplies. Since there are so many line items on this set up it is difficult to budget each item. In capital expenditure they are planned over many for 1 year or our 3-4 years as well based on the strategic plan of the product lines and production needs. The companies projected capital purchases, obsolescence equipment, equipment replacements needs, expansion plans and new ventures are all important to the choices that best fit the company. Administrative or operating budget is a very important administrative budget in my opinion. Its function is to anticipate operate workloads, included as expenses incurred during supply operations. These expenses are what it takes to operate, lights, heat, wages, salaries, equipment cost, IT costs, office supplies, telephone...
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...Research and Development (R&D) 1. Specific areas in which R&D was carried out: § Design, development and type tests on 12kV panels for withstanding 25kA, 1s internal arc fault, 12kV, 4000A, 40kA Panel & VCB and bushing for R.M.U. to withstand 20kA, 0.1s internal arc fault. § Design, development and type tests of cost effective 36kV OVCB and compact substation. § Development of 420kV, 63kA DBR & ES successfully. § DTC projects for 420kV/245kV/145kV for DBR, HCB & 420/245kV PG. § Cost effective circuit breakers of 400 kV & 400 kV 63 kA range were designed developed and tested. § New product development – Prototype development of 1.73 MW motor. § Frame size 500 developed for launch in this Financial Year 2010-11. § Motors for IE2 and IE3 efficiency class developed and is under testing in Germany, FS 71 to FS 355. § Launch of CACA design in medium voltage. § Design of switched mode power supplies for industrial and railway applications. § Design of battery chargers / earth leakage relay for railway applications. § Development of dry type multi-secondary transformer of 3500kVA for MV drives. § Development of Drive Control Cabinet for 10 Cubic meter Electric Mining Shovels. § Development of LV Drives Sinamics V50 55kW to 500kW. § Development of Traction / Electrical cabinets for 4500HP Diesel Locomotive Control. § Localization of MV Drives Perfect Harmony 500kVA to 3500kVA. § Localization of counting Head for...
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...Indefeasible Rights of Use (IRUs) (1st Edition, Revised) Published by Inland Revenue Authority of Singapore Published on 07 Oct 2003 © Inland Revenue Authority of Singapore All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, including photocopying and recording without the written permission of the copyright holder, application for which should be addressed to the publisher. Such written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. 1 1.1 Introduction On 28 February 2003, DPM and Minister for Finance announced in the 2003 Budget Speech that a deduction for writing-down allowance (WDA) will be granted on expenditure incurred for the purchase of Indefeasible Rights of Use (IRUs) over the number of years for which the IRU is acquired. This is to encourage telecommunication carriers to hub their networks in Singapore. The WDA is effective from the Year of Assessment (YA) 2004. An “Indefeasible Right of Use” or “IRU” refers to an indefeasible right to use an international telecommunications submarine cable system1. An international telecommunications submarine cable system is often built and owned by a few parties, commonly known as a consortium of members (referred to as “the grantors”). The grantors may grant the right to use international telecommunications submarine cable system through an IRU agreement or arrangement, to a third party (a nonconsortium...
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...Revenue Expenditures & Capital Expenditures Tracey DeSautel November 1, 2014 University of Phoenix XACC/291 In the world of accounting, there are numerous types of expenses that come along with running a business on a day to day basis as well as overall. There are things that break down and add value to the companies assets as well as things that are expensed to run the business on a daily basis. These can break down to two important items and those are Revenue expenditures and Capital Expenditures. Revenue expenditures is the amount that is expensed immediately. Thereby being matched with revenues of the current accounting period. Examples include things such as routine repairs because they are charged to a direct account such as “ repairs and maintenances expenses> these do not extend the life or improve the assets for the company. Capital expenditures are amounts spent to acquire or improve a long term asset. These can be things such as buildings or even equipment. These are usually recorded in accounts classified as “ property, plants and equipment”. These are charged to depreciation expense over the assets lifespan. It breaks down to capital expenditures are for items such as machinery and buildings where as revenue expenditures are for things that create revenue such as advertising and labor. A further look into capital expenditures and examples are that, that do not occur in daily transactions for the company and include such purchases that may include the...
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...by using monitor activity it will provide good information on how Sainsbury’s is doing in paying expenses, sales and receiving payment. Another reason why accounting is important for Sainsbury’s because it provides managers important information for decision making. Also it is important for accounting in Sainsbury’s because Sainsbury’s need to provide up to date information to the stakeholders about financial information. P2: Difference between Revenue Income, Revenue Expenditure, Capital Income and Capital Expenditure. Capital income: Capital income is when money is invested by other investors or by the owner to buy equipment and start up a business. The equipment brought will stay in a business long and medium periods of time for example equipment, premises and vehicles and they are called fixed assets. When you buy opining stock the money will come out of the capital income and after a month or so your stock will be paid by revenue income. Capital expenditure: Capital expenditure is the amount of money spent to upgrade or acquire assets for example vehicles, building, equipment and machinery. So by acquiring these assets you can increase the company’s efficiency or capacity for more than one accounting period. Revenue income: Revenue income is when the money comes into a business from day to...
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