Screening or Concurrent Control.

Controls may also be applied concurrently with the

effort
being controned. A new engineer may be given an unfamiliar assignment one step at a
time, with
review by the supervisor after each step. A production schedule may include several inprocess
inspection points so that further investment in defective parts can be avoided. A baseball
coach
will observe the effectiveness of a pitcher literally one pitch at a time, prepared at any
point to.
start warming up a replacement in the bullpen. However, concurrent control can be
expensive and
stifling of initiative and can lead to inactivity while awaiting the next inspection.
Feedforward (or Preliminary or Steering) Control. The essence of feedforward
control is a
system that can predict'the impact of current actions'or events on future outcomes, so
that current
decisions canbe adjusted to assure that future goals will be met. Engineers and
managers have.
many applications wherecontrols must be applied in the early phases of a project or
program. 7
l A nuclear power reactor may take 10 years to produce, and the construction project
manager
i needs management .tools that will predict, as the project progresses,_,whethergit.is
likely to be.
completed on time and within budget. In Chapter 14 diSCuss management-tools, Such
as work.
breakdown structures and network systems (PERT or CPM), thatenable us to'identify the
longest.critical path of tasks that must be completed in sequence to complete the project. As
the project
continues, control over the early tasks in this'system gives us feedforWard control over
the total
l project duration. The earned value methods of Chapter 15 provide the same Sort of
feedforward
1 control of costs.
1 Examples of feedforward control in manufacturing include careful screening of
sequences
1 for machine operations, in3pection of raw materials, and preventive maintenance of
machines,
i all in an attempt to reduce (control) later production problems. The prudent taxpayer
does not
I wait until April 15 to discover his or her tax liability fofthe previous year; he or she tries
to
estimate'it before the year ends in order to manage cash contributions, sales of stock,
and other
actions before December 31 to reduce or defer tax. Similarly, the comptroller of a
corporation
will try to forecast the next periods revenue and sales so that cashrwill be ready when
needed
(and effectively invested when not). These also are examples of feedforward control.

Characteristics of Effective Control Systems

An effective control system should satisfy most of the following criteria:
H o Effective. coma] systems should measure what needs .to be measured and
controlled.
Efficient. Control systems should be economical and worth their cost.
o Timely. Control systems should provide the manager with information in time to take
corrective action. A tax accounting system is expected to show costs to the nearest dollar,
but
it does not need to do so for the year ending December 31 until the following April 15. A
control system for monthly expenses, however, might be satisfied with i5% accuracy, but
demand information within a week after the end of the month measured.
0 Flexible. Control systems should be tools, not straitjackets, and should be adjustable to
changing conditions.

FINANCIAL CONTROLS
Financial Statements
Engineers need to know about financial controls because their continued
employmentmay be dependent upon
how they support and contribute to their
companys bottom line. Many business owners do not realize that financial statements
have a value that goes far beyond their use to prepare tax returns or loan applications.
Financial controls include financial statements (especially the balance sheet and income
statement), financial ratios used in ratio analysis, financial and operating budgets and
the nature of the budgeting process, and financial audits. Financial statements provide
the basic information for the control of cash and credit, which are essential to the
survival of a company. There are two major types of financial statements: the balance
sheet and the income statement.
The balance sheet shows the firms financial position at a particular instant in
time-a financial snapshot, as it were. This snapshot is usually the financial status at the
end of a calendar year or a financial year. The interval can be shorter, for example, at the
end of a quarter. Table 8-1 gives an example.
Assets are what the company owns and consist principally of current assets
(assets that can be converted into cash within a year) and fixed assets (property, plant,
and equipment at original cost, less the cumulative depreciation of plant and equipment
(but not land) and depletion of natural resources since they were purchased).
Liabilities are what the firm owes and consist of current liabilities that must be
paid within a year and long-term debt. The difference between assets and liabilities is the
net month or equity of the stockholders, and it consists of the original investment (what
was paid in for common and preferred stock) plus the retained earnings (the cumulative
profits over the years after dividends are paid).
An income statement (see Table 8-2), also called a profit and loss or revenue and
expense statement, shows the financial performance of the firm over a period of time
(usually a year or a month).
Sterling Chemicals had 2005 net sales of about $3.05 million. Production costs
(materials, labor, and production overhead costs) were $2.0 million, and the depreciation
and depletion related to 2005 production were $0.25 million. Selling, advertising, and
shipping cost $0.10 million, and general and administrative expenses (G&A, the cost
of general management, R&D, and miscellaneous activities not chargeable elsewhere)
were $0.20 million. Subtracting the total expense of about $2.55 million from net sales
leaves an operating profit of $0.5 million. After adjusting for interest and other
nonoperating income and expense, the pretax income is found to be $0.54 million, and
the net income (after taxes) is $0.28 million. The board of directors decided to return part
($0.32 million) of net income to the stockholder-owners as dividends and to reinvest the
rest on their behalf as an addition to retained earnings.
The cash flow, or sources and uses of funds, statement shows where funds come
from (net profit plus depreciation, increased debt, sale of stock, sale of assets) and what
they are used for (plant and equipment, debt reduction, stock repurchase, and
dividends). Like the income statement, it concerns financial activities over time. Note the
special nature of depreciation and depletion. They represent an expense in that they
permit recovery over time of earlier capital investment as a deduction from taxable
income. Unlike other expenses, they, are only allocations and do not represent money
expended in the current period. The portion of ravenue allocated as depreciation or
depletion is therefore available without penalty of taxation for reinvestment in
replacement assets or in entirely different assets.

Ratio Analysis
Financial ratios are ratios of two financial numbers taken from the balance sheet
and/or the income statement. These ratios provide a framework for historical
comparisons within the firm and for external benchmarking relative to industry
performance. They can also be used to set financial targets or goals for the firm. The
desirable levels of financial ratios vary with the industry, economy, culture, and recent
company history. Used with care, however, they are invaluable tools for benchmarking
within your industry.
Four types of ratios are ordinarily calculated: (1) liquidity, (2) leverage, (3) activity,
and (4) profitability ratios. Each is discussed and calculated for the mythical Sterling
Chemical Company in Table 8-3. Values are taken from the Balance Sheet in Table 8-1,
with exceptions noted.
Liquidity ratios measure the ability to meet short-term obligations. The most
commonly used ratio is the current ratio, which measures a firms current assets to
current liabilities. The current ratio measures a firms ability to pay its Current
obligations. Many analysts use a current ratio of 2.0 as a prudent minimum, but this ratio
varies between industries. A high current ratio (such as 10.0) may simply indicate that
assets are not being efficiently employed. A ratio lower than that of the industry average
suggests that the company may have liquidity problems. Since quickly liquidating.
(converting to cash) the firms inventories might prove difficult, analysts also use the
acid test ratio or quick assets ratio of quick assets (current assets minus
inventories) to current liabilities. An acid test ratio over 1.0 is prudent, and Sterling
Chemical satisfies both liquidity tests.
Leverage ratios identify the relative importance of stockholders and outside
creditors as a source of the enterprises capital. A simple measure is the ratio of total
debt to total assets (debt as a fraction of the sum of debt and stockholders equity). A
common alternative, which can be derived from this one, is the debt-to-equity ratio.
Leverage ratios vary significantly by industry. For example, an electric utility might well
have a debt/assets ratio of 0.5 (debt/equity ratio of 1.0), while retail firms might have
much lower debt ratios.
Activity ratios (also known as operating ratios) show how effectively the firm is
using its resources. One common measure is inventory turnover, measured in Table 8-3
by dividing the cost of goods sold (from income statement) by total inventory (both
valued at the manufacturing cost invested in them). Another activity ratio is asset
turnover, or sales/assets, a measure of how well the firm is using its assets to produce
sales. A third is the accounts receivable turnover, the ratio of net sales (income
statement) to accounts receivable. This ratio is often, in turn, divided into the traditional
(but inaccurate) measure of 360 days per year to calculate the average collection period.
Profitability ratios describe the organizations profit. The profit margin measures
the net income as a percentage of sales. Other measures are the profit as a percentage
of total assets and the earnings per share ofcomrnon stock (the net income less
preferred stock dividends, divided by the shares of common stock outstanding), which
the stock market investor can compare with the current market price. Remember that
desirable levels of financial ratios vary with the industry, economy, culture, and recent
company history.
Budgets
Budgets are perhaps the most common and universally used control techniques.
They are plans
for the future allocation and use of resources (usually, but not always financial ones) over
a fixed period of time. The budgeting process forces managers to think through future

operations in quantitative terms and obtain approval of the planned scope of Operations,
and it provides a standard of comparison for judging actual performance in the control
process.

KONTROL KEUANGAN
Laporan Keuangan
Insinyur perlu tahu tentang kontrol keuangan karena pekerjaan lanjutan mereka
mungkin tergantung pada bagaimana mereka mendukung dan memberikan kontribusi
untuk perusahaan mereka "Intinya." Banyak pemilik bisnis tidak menyadari bahwa
laporan keuangan memiliki nilai yang jauh melampaui penggunaannya untuk
mempersiapkan pengembalian pajak atau aplikasi pinjaman. Kontrol keuangan termasuk
laporan keuangan (terutama neraca dan laporan laba rugi), rasio keuangan yang
digunakan dalam analisis rasio, anggaran keuangan dan operasi dan sifat dari proses
penganggaran, dan audit keuangan. Laporan keuangan memberikan informasi dasar
untuk kontrol cash dan kredit, yang penting untuk kelangsungan hidup perusahaan. Ada
dua jenis utama dari laporan keuangan: neraca dan laporan laba rugi.
Neraca menunjukkan posisi keuangan perusahaan pada suatu saat tertentu dalam
waktu- keuangan "snapshot," seperti itu. Snapshot ini biasanya status keuangan pada
akhir tahun kalender atau tahun keuangan. Interval bisa lebih pendek, misalnya, pada
akhir seperempat. Tabel 8-1 memberikan contoh.
Aset adalah apa perusahaan "memiliki" dan terdiri terutama dari aktiva lancar
(aktiva yang dapat dikonversi menjadi uang tunai dalam waktu satu tahun) dan aktiva
tetap (properti, pabrik, dan peralatan dengan biaya asli, kurang depresiasi kumulatif
tetap (tapi tidak tanah) dan menipisnya sumber daya alam karena mereka dibeli).
Kewajiban adalah apa yang perusahaan "berutang" dan terdiri dari kewajiban
lancar yang harus dibayar dalam utang tahun dan jangka panjang. Perbedaan antara
aset dan kewajiban adalah bulan bersih atau ekuitas pemegang saham, dan itu terdiri
dari investasi awal (apa yang dibayar untuk saham biasa dan preferen) ditambah laba
ditahan (keuntungan kumulatif selama bertahun-tahun setelah dividen dibayarkan) .
Laporan laba rugi (lihat Tabel 8-2), juga disebut laba rugi atau pendapatan dan
beban pernyataan, menunjukkan kinerja keuangan perusahaan selama periode waktu
tertentu (biasanya satu tahun atau bulan).
Sterling Chemicals memiliki 2005 penjualan bersih sekitar $ 3.050.000. Biaya
produksi (bahan, tenaga kerja, dan biaya overhead produksi) adalah $ 2,0 juta, dan
depresiasi dan deplesi yang berhubungan dengan produksi 2005 adalah $ 0.250.000.
Jual, iklan, dan pengiriman biaya $ 0,10 juta, dan "umum dan administrasi" Beban ("G &
A," biaya manajemen umum, R & D, dan kegiatan lain-lain tidak dikenakan biaya di
tempat lain) adalah $ 0,20 juta. Mengurangkan biaya total sekitar $ 2.550.000 dari
penjualan bersih daun laba operasional sebesar $ 0.500.000. Setelah disesuaikan untuk
pendapatan bunga dan pendapatan non-operasi lain dan beban, pendapatan sebelum
pajak ditemukan menjadi $ 0.540.000, dan laba bersih (setelah pajak) adalah $
0.280.000. Dewan direksi memutuskan untuk kembali bagian ($ 0.320.000) dari laba
bersih untuk pemegang saham pemilik sebagai dividen dan untuk menginvestasikan
kembali sisanya atas nama mereka sebagai tambahan laba ditahan.
Arus kas, atau sumber dan penggunaan dana, pernyataan menunjukkan di mana
dana berasal dari (laba bersih ditambah depresiasi, peningkatan utang, penjualan
saham, penjualan aset) dan apa yang mereka digunakan untuk (tetap, pengurangan
utang, pembelian kembali saham , dan dividen). Seperti laporan laba rugi, menyangkut
kegiatan keuangan dari waktu ke waktu. Perhatikan sifat khusus dari depresiasi dan
deplesi. Mereka mewakili beban dalam bahwa mereka memungkinkan pemulihan dari
waktu ke waktu dari investasi modal awal sebagai pengurang penghasilan kena pajak.
Tidak seperti biaya lainnya, mereka, hanya alokasi dan tidak mewakili uang yang
dikeluarkan pada periode berjalan. Porsi ravenue dialokasikan sebagai depresiasi atau
penyusutan karena itu tersedia tanpa hukuman perpajakan untuk reinvestasi aset

pengganti

atau

aset

yang

sama

sekali

berbeda.

Analisis rasio
Rasio keuangan adalah rasio dari dua angka keuangan yang diambil dari neraca
dan / atau laporan laba rugi. Rasio ini memberikan kerangka kerja untuk perbandingan
sejarah dalam perusahaan dan untuk benchmarking eksternal relatif terhadap kinerja
industri. Mereka juga dapat digunakan untuk menetapkan target atau tujuan keuangan
bagi perusahaan. Tingkat diinginkan rasio keuangan berbeda dengan industri, ekonomi,
budaya, dan sejarah perusahaan baru-baru ini. Digunakan dengan hati-hati,
bagaimanapun, mereka adalah alat yang sangat berharga untuk benchmarking dalam
industri Anda.
Empat jenis rasio yang biasanya dihitung: (1) likuiditas, (2) leverage, (3) aktivitas,
dan (4) rasio profitabilitas. Setiap dibahas dan dihitung untuk mitos Sterling Chemical
Company pada Tabel 8-3. Nilai-nilai yang diambil dari Neraca pada Tabel 8-1, dengan
pengecualian mencatat.
Rasio likuiditas mengukur kemampuan untuk memenuhi kewajiban jangka
pendek. Rasio yang paling umum digunakan adalah current ratio, yang mengukur aset
perusahaan saat ini untuk kewajiban lancar. Rasio lancar mengukur kemampuan
perusahaan untuk membayar kewajiban saat ini. Banyak analis menggunakan rasio
lancar 2,0 sebagai minimum bijaksana, tetapi rasio ini bervariasi antara industri. Rasio
arus tinggi (seperti 10.0) mungkin hanya menunjukkan bahwa aset tidak sedang
digunakan secara efisien. Rasio lebih rendah dari rata-rata industri menunjukkan bahwa
perusahaan mungkin memiliki masalah likuiditas. Sejak cepat melikuidasi. (Mengkonversi
uang tunai) persediaan perusahaan mungkin terbukti sulit, analis juga menggunakan
acid test ratio or quick assets ratio "quick aset " (saat aset dikurangi persediaan)
untuk kewajiban lancar acid test ratio lebih dari 1,0 adalah bijaksana, dan Sterling Kimia
memenuhi kedua tes likuiditas.
Rasio leverage mengidentifikasi kepentingan relatif dari pemegang saham dan
kreditur luar sebagai sumber modal perusahaan. Ukuran sederhana adalah rasio total
utang terhadap total aset (utang sebagai sebagian kecil dari jumlah utang dan ekuitas).
Sebuah alternatif umum, yang dapat diturunkan dari satu ini, adalah rasio utang
terhadap ekuitas. Rasio leverage bervariasi secara signifikan oleh industri. Sebagai
contoh, sebuah utilitas listrik mungkin juga memiliki rasio utang / aset (rasio utang /
ekuitas 1.0) 0,5, sementara perusahaan retail mungkin memiliki rasio utang yang lebih
rendah.
Rasio aktivitas (juga dikenal sebagai rasio operasi) menunjukkan seberapa efektif
perusahaan menggunakan sumber dayanya. Salah satu ukuran umum adalah perputaran
persediaan, diukur pada Tabel 8-3 dengan membagi harga pokok penjualan (dari laporan
laba rugi) dengan total inventory (baik senilai biaya produksi diinvestasikan di
dalamnya). Rasio aktivitas lain adalah perputaran aset, atau penjualan / aset, ukuran
seberapa baik perusahaan menggunakan aset untuk menghasilkan penjualan. Sebuah
ketiga adalah perputaran piutang, rasio penjualan bersih (laporan laba rugi) untuk
piutang. Rasio ini sering, pada gilirannya, dibagi ke dalam ukuran tradisional (tapi tidak
akurat) dari 360 hari per tahun untuk menghitung periode penagihan rata-rata.
Rasio profitabilitas menggambarkan keuntungan organisasi. Margin laba
mengukur laba bersih sebagai persentase dari penjualan. Langkah-langkah lain adalah
keuntungan sebagai persentase dari total aset dan laba per saham of'comrnon saham
(laba bersih dividen saham kurang disukai, dibagi dengan saham biasa yang beredar),
yang investor pasar saham dapat dibandingkan dengan pasar saat ini harga. Ingat bahwa
tingkat yang diinginkan dari rasio keuangan berbeda dengan industri, ekonomi, budaya,
dan sejarah perusahaan baru-baru ini.

Anggaran
Anggaran mungkin adalah teknik kontrol yang paling umum dan universal
digunakan. Mereka rencana untuk alokasi masa depan dan penggunaan sumber daya
(biasanya, tapi tidak selalu yang keuangan) selama periode waktu yang tetap. Manajer
kekuatan proses penganggaran untuk memikirkan operasi di masa depan dalam hal
kuantitatif dan memperoleh persetujuan dari lingkup yang direncanakan Operasi, dan
menyediakan standar perbandingan untuk menilai kinerja aktual dalam proses kontrol.