Economics for Telecom Engineers

Day 1:  Basics, P&L, and Balance Sheet

 

• Introduction
• The Engineer’s Financial Role
• What Are the Cost Elements of a Network
• Cost versus Revenue versus Income
• Fiscal Understanding
• What is a Balance Sheet?
• Example:  Reviewing a Balance Sheet
• Objectives of an Economic Analysis/Engineering Economic Study
• The Engineering Economic Study Processes
• What Engineering Economic Studies Are Not and Don’t Do
•  Review and Q/A
•  Exercise:  Identifying the Cost Elements of Your Product(s) and Service(s)
• Case Study
• Accounting Concepts
  • Telecom/Technology Accounting Classifications
• What is an Asset?
  • Intellectual Property is an Asset:  How Do you Value it? Why Do You Value it?
• Liabilities and Owner’s Equity
• Balance Sheet
• Shareowner’s Equity
• Operating Revenues
• Operating Expenses
• Income Statement:  What is Income?
• What is the Relationship between the Balance Sheet and the Income Statement?
• After Income:  Earnings and Profit
• How Do You Balance Technology and Cost?
• Review and Q/A
• Open Discussion:  How Do You Make a Decision?
• Case Study:  Making a Decision

 

Day 2:  Capital Expenditure

 

• Capital Expenditures and the Nature of Costs
• What Are Capital Expenditure Policies?
• Example:  Capital Expenditure Policies in a Healthy Company
• Capital Expenditure Policy Structure
• Example:  Capital Expenditure Policy
• What Are:
  • Revenue
  • Gross Profit
  • Break Even
  • Fixed Capital Investment
  • Working Capital
  • Income Tax
  • Depreciation
  • Interest
  • Net Profit/Operating Profit
  • Rate of Return on Investment
  • Payout/Payback Period
  • Discounted Rate of Return
  • Minimum Rate of Return
• Example Review:  Income and Rate of Return
• Case Study:  Developing the Rate of Return
• Cost Expenditures:  When Can You and Should You Spend Capital?
• Capital Costs
• First Costs:  Their Role and Future Impact
• Financial Loading:  Engineering Loading
• Continuing Costs
• Maintenance Expenses
• Depreciation
• Advertising
• Travel and Entertainment (T&E)
• Payroll
• Benefits
• General Administration
• Outsourcing
• Example:  Typical Cost Structure of a Company
• Example:  Your Own Company
• Equipment
  • Salvage, Scrap, and Junk Value
  • Estimating the Useful Life of an Asset
• Attributes of Depreciation:  Why Is It Important?
  • Methods of Depreciation
  • Straight-Line Method
  • Declining-Balance Method
  • Double-Declining Balance Method
  • Sum-of-the-Years-Digits Method
  • The Sinking-Fund Method
• Which Depreciation Method Do You Use, If at All?
• Exercise: Sample Design and Engineering Problem Taking into Account Engineering Economics
• Case Study:   Valuing Equipment and Technology

 

Day 3: Mathematics of Investment

 

• Mathematics of Money
  • Time is Money and Money Is Time
• Interest:  Income and Penalty
• Equivalence
• Present Worth and Future Worth:  Money and Equipment
• Example:  Review
• What is an Annuity?
• Example of an Annuity
• Time Value of Money – How Does It Fit Into Your Business?
• Future Worth of Money
• Present Worth of Money
• Example Review of How Your Technology’s Value is Impacted by Time
• Investment Decision Frameworks and Drivers
  • Qualitative Decision Framework
  • Quantitative Decision Framework
• Investment Decision out of Necessity
• Replacing Worn out and Obsolete Equipment
• Repairs to Facilities
• Research and Development
• The Investment Evaluation and the Market Strategy; Integrating the Two and  Making a Decision
• Case Study:  Start to finish; taking a product from beginning to sale.
• Wrap-up:  Putting It All Together – Group Discussion