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A spreadsheet for capital equipment financial modeling.

A spreadsheet for capital equipment financial modeling

It seems almost impossible to remember (without pain) how financial analyses for capital equipment requests were prepared before computers entered the laboratory. The proliferation of personal computers teamed with powerful spreadsheet programs has allowed accountants and financial officers to scrutinize capital expenditure requests using financial models tailored to their unique needs.

Most clinical laboratory managers have access to PCs within the lab or elsewhere in the institution. An investment in electronic spreadsheet software and applications training, if not already available, should be considered an investment in heightened productivity. With the proper tools you can assemble data, calculations (and recalculations), key ratios, charts, and graphics into meaningful reports with lighting speed.

Predicting the financial repercussions of various decisions is far less problematic when "what-if" analyses leap to the screen. A glance at a few key cells listing net present value, profitability index, payback period, and return on investment will tellall - or as close to "all" as you can get without a crystal ball. *Spreadsheets like this one are of particular help when you must: *Choose one of several technologically comparable instrument systems; *Decide whether to buy, lease, or rent an instrument, reagents, or both; *Negotiate maintenance and service contracts; *Predict how increases or decreases in test volume will affect your department or section's operating budget; *Prepare an annual budget for capital equipment; and *Compete with other hospital departments for scarce capital resources.

In figure I, the Symphony spreadsheet (Lotus Development Corp., Cambridge, Mass.) provides columns and row of managerial inputs used to begin the analysis. Figure II shows the results of computations performed on managerial inputs by program commands embedded in the spreadsheet. Figure III displays the essential formulas in the program. Where appropriate, financial terms are defined.

A simple alternative to building the spreadsheet yourself is to import it from Med TechNet, a computerized bulletin board service run by the Department of Medical Technology, State University of New York at Buffalo. Request the file CAPEQUIP (file area #4, Medical/Clinical Files of Interest), which also contains suggestions for making also contains suggestions for making financial ratios as useful as possible.

The modem number of Med TechNet is (716) 897-0504. Instructions for downloading a file from Med TechNet to a PC were recently published in this column (MLO, November 1989).

Conserving funds through careful planning is (almost) easy - if you know how. The simple model presented here can be modified in many ways to work best for you.

PHOTO : Input area

PHOTO : Automatic output area

PHOTO : Formulas underlying calculations and graphics into meaningful reports with lightning speed.

Predicting the financial repercussions of various decisions is far less problematic when "what-if" analyses leap to the screen. A glance at a few key cells listing net present value, profitability index, payback period, and return on investment will tell all - or as close to "all" as you can get without a crystal ball.

Spreadsheets like this one are of particular help when you must: * Choose one of several technologically comparable instrument systems; * Decide whether to buy, lease, or rent an instrument, reagents, or both; * Negotiate maintenance and service contracts; * Predict how increases or decreases in test volume will affect your department or section's operating budget; * Prepare an annual budget for capital equipment; and * Compete with other hospital departments for scarce capital resources.

In Figure I, the Symphony spreadsheet (Lotus Development Corp., Cambridge, Mass.) provides columns and rows of managerial inputs used to begin the analysis. Figure II shows the results of computations performed on managerial inputs by program commands embedded in the spreadsheet. Figure III displays the essential formulas in the program. Where appropriate, financial terms are defined.

A simple alternative to building the spreadsheet yourself is to import it from Med TechNet, a computerized bulletin board service run by the Department of Medical Technology, State University of New York at Buffalo. Request the file CAPEQUIP (file area #4, Medical/Clinical Files of Interest), which also contains suggestions for making financial ratios as useful as possible.

The modern number of Med TechNet is (716) 897-0504. Instructions for downloading a file from Med TechNet to a PC were recently published in this column (MLO, November 1989).

Conserving funds through careful planning is (almost) easy - if you know how. The simple model presented here can be modified in many ways to work best for you.

PHOTO : Figure I Input area

PHOTO : Figure II Automatic output area

PHOTO : Figure III Formulas underlying calculations
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Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:TerHark, Dave; Diaz, Jesse
Publication:Medical Laboratory Observer
Article Type:column
Date:Apr 1, 1990
Words:743
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