Incremental Analysis Essay
Incremental in comprehensive analyses both serve similar purposes in decision making in the workplace. The argument is that incremental is more economical than and just as effective as comprehensive analyses. Since both are used to make important decisions within a company, which one will serve the best purpose while still being justifiable and cost effective to complete? Both will complete the same task, but one will do it better and we will be explaining why incremental analyses are the better ones to use. Incremental Analysis
Incremental analysis is important and standardized approach to determine various business decisions concerning cost and revenue. This tool is very crucial and time saving; it leads in a systematic way to identify the probable effects of decisions on future earnings in order to make better decisions concerning the profitability of the company. Management utilizes incremental analysis to identify relevant information related to costs and revenues associated and impacted by the decision; this information is further compared to make the most profitable decision. Examples of decisions best made through incremental analysis include – whether to accept an order at special price, make-or-buy, sell or process further, retain or replace equipment, eliminate an unprofitable segment decision and allocate limited resources, and decisions (Kimmel et.al, 2011). Comprehensive Analysis
Comprehensive analysis is the financial term used for evaluating every financial detail of the entire operation in a company. The purpose of conducting comprehensive analysis is to determine a company’s present financial position as well as its expected financial standing in the future. In conducting comprehensive analysis, both current and historical fiscal reports must be collected to analyze the status of the company’s investments. These reports are also needed to calculate the financial ratios of different companies.
Determining the financial ratios is the next step when conducting comprehensive analysis as these ratios will determine the company’s performance and its effectiveness. The ratios will give a snap shot of the company’s overall financial condition, strengths and weaknesses of its financial activities which will help creditors and investors decide whether company is worth investing in. And finally, compare the company’s ratio, to the ratio of another organization with similar production processes to determine if the company will succeed or needs enhancement. Disagree/ or Agree
According to our research we have come to an agreement that Incremental Analysis is the best decision and focus tool that we have. The reasoning is because it reveals faster results and cost less. Another two are when reports are shown and analysis are done it reveals the same results. It also focus on a specific subject or topic. Incremental analysis also pulls reports and help management make decisions whether to accept orders, to make a product or purchase, sell and process products furthers, or even the retaining and replacement of equipment that are used by the business.
JIm, B., & Hughes, M.C. (2014, April). What is comprehensive analysis. Wise Geek, (). Retrieved from http://www.wisegeek.com/what-is-comprehensive-analysis.htm
Virtual Advisors Inc. (2011) Analyzing your financial ratios retrieved from http://www.bbt.com/bbtdotcom/business/small-business-resource-center/growing-a-business/financial-ratios.page