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Analysis Tools

Financial decision calculators: Project Evaluation, Economic Order Quantity, and Variances. (Requires Professional Plan)

Beyond building master budgets over time, financial leaders need to make quick decisions based on hypothetical scenarios. Cord includes a suite of mathematical tools designed to evaluate the profitability and efficiency of your business.

You can access them from the Tools tab within the Budgets module.

1. Project Evaluation (NPV and IRR)

Before investing $100,000 in a new branch or a new machinery line, you need to know if the project is financially viable over time, considering that money today is worth more than money tomorrow.

This tool calculates:

  • NPV (Net Present Value): Discounts future cash flows at a given interest rate and subtracts your initial investment. If the NPV is positive, the project is accepted.
  • IRR (Internal Rate of Return): The exact rate of return the project will yield. You should compare it against your cost of capital (your “discount rate”).
  • Payback period: In how many years you will recover your initial investment.

Smart Assistant: If you are unsure what the “Annual Net Cash Flow” will be but you do know the profit it will generate, the equipment depreciation, and the taxes, the dropdown assistant will automatically derive the actual cash flow.

2. Economic Order Quantity (EOQ)

If you hold too much inventory, your cash is trapped (Carrying Cost). If you order too little, you will spend a fortune on freight and constant ordering (Ordering Cost).

The Economic Order Quantity (EOQ) model finds the perfect mathematical balance. By entering your annual demand and costs, Cord will tell you:

  • Economic Order Quantity: Exactly how many units you should request every time you place an order to minimize total costs.
  • Reorder Point: If your supplier takes 5 days to deliver, the tool will tell you exactly at what inventory level you must trigger the next purchase so you never run out of stock.

3. Variances Analysis (Flexible Budget)

When the end of the month arrives and you discover that you spent more than planned to produce a batch, the question is: Was it because the materials were more expensive, or because the workers wasted material?

The Variances Analysis breaks down your cost deviations into two parts:

  • Price Variance: Compares the standard cost you budgeted against the actual price you paid.
  • Quantity Variance (Efficiency): Compares the quantity of materials you should have used (according to the recipe) against what you actually used on the production line.

Cord will automatically tag each variance as F (Favorable) or D (Unfavorable).

Saved Scenarios

For each of these calculators, you don’t have to lose your work when you close the tab. Cord allows you to click Save scenario, give it a name (e.g. “North Branch Project”), and leave it saved in your vault.

You can come back later, adjust the interest rate or the annual demand, and press Save changes or Save as new to create unlimited simulations.