Kathryn_Ellis

CA PPM Tuesday Tip: Determine Financial Metrics

Discussion created by Kathryn_Ellis Employee on Jul 29, 2015
Latest reply on Aug 1, 2015 by navzjoshi00

In reading the topic from the product documentation regarding the formulas for Determining Financial Metrics, it is important to understand how the CA PPM application

 

 

All CA PPM Financial Metric computations use standard monthly period amounts.  Therefore, if you are entering data into cost plans as a lump sum or in other period types (such as annually), the application will compute and distribute the data into monthly period amounts before executing the computations for NPV, ROI, IRR, MIRR.

Example:  If the data is entered annually, the daily amount is computed for 365 or 366 days (leap year).  Then the daily amount is computed for each monthly period based on the number of days in the standard month (31, 28/29, 31,30,31,30,31,31,30,31,30,31).  Once the daily amount is determined, the monthly amount is determined as daily amount * number of days in month. This monthly amount is used in the formulas to compute the financial metrics.  The formulas use full standard calendar monthly periods.  To determine total months, if the Start and End dates for the Cost Plan date range or the Benefit Plan date range is not on the first day or the last day of the month, the full month is counted towards the total number of months.

 

This is different than what you might do if using other methods to compute your financial metrics.  Typically a 'yearly' amount is used.  If you use the 'yearly' amount, it will not match the CA PPM computed amounts.

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