AirwaySim
Online Airline Management Simulation
Login
Username
Password
 
or login using:
 
My Account
Username:
E-mail:
Edit account
» Achievements
» Logout
Game Credits
Credit balance: 0 Cr
Buy credits
» Credit history
» Credits FAQ

Author Topic: [ok] Profit vs. Cash flow, Accounting, Income statement  (Read 19816 times)

Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #80 on: December 21, 2013, 12:35:51 PM »
I've increased the proposed lifetime to 25 yrs .. For used planes between 25-35 yrs their book value will be then zero.

It's twofolded thing .. airlines in game rarely use their new planes beyond 15-20yrs but used planes may have life still when they are 25y, but not much further.

brique

  • Former member
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #81 on: December 21, 2013, 12:39:50 PM »


However, for purchases of USED aircraft .. I think the depreciation period could be different. 20 years from the point of purchase of the plane may be too much. However having two different systems in place is difficult and probably confusing.


One query would be should we adopt the notion that, as with new cars, just driving it out the showroom hits its value for a sizeable chunk, then, after that first year, the decline in value is more steady?

Offline schro

  • Members
  • Posts: 3076
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #82 on: December 21, 2013, 01:15:35 PM »
So, to flog a [-]'ed topic, the use of aircraft cycle counts and hours can also be used in conjunction with the aircraft's respective limits to determine remaining useful life....


EDIT: to depreciate a full 20 years counting from the purchase date, does not makes sense to me... imagine if you buy a 29yo airplane, it will finishing the amortization at 49yo...

Should work just fine for DC9s ;-)

Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #83 on: December 21, 2013, 05:02:50 PM »
The aircraft selling price suggestion is now online.

For now it also displays the "calculated value" (same as before) but later it will be replaced by "book value".

The selling price suggestion takes into account in it's price suggestion the following:
 - valid C/D checks?
 - how many other planes of the same fleet group are for sale (this has a rather large emphasis)
 - how many ... are in operation
 - how many ... are in order
 - age and condition

Please test around and see if you get any strange results. You can always edit the price manually still like before if it gives strange suggestions..



Few examples:

- JA -
 B707, 14yo - current calc. value $21m, recommended selling price $6m   .. reason => most 707s seem to be scrapped already, only 90 in ops, old plane
 B727, 9yo - current calc. value $16m, recommended selling price $10m  .. lots of 727s in operation, but only rather few orders for it and many for sale
 DC-8, 16yo, - current calc value $18m, recommended price $5m ... same reasons as B707
 DC-10, 8yo, valid checks, calc.value $47m, recommends $61m .. many in operation/ordered
 DC-10, 8yo, invalid checks, calc.value $47m, recommends $56m


- MT -
B737-900, 0yo, val $85m, rec $128m
A318, 0yo, val $72m, rec $109m
AN-148, 0yo, val $24m, rec $16m

- DOTM -
737-200, val $11m, rec $3m
737-300, val $36m, rec $53m
A320, val $50m, rec $75m

(figures rounded)
« Last Edit: December 21, 2013, 05:58:58 PM by sami »

Offline schro

  • Members
  • Posts: 3076
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #84 on: December 21, 2013, 07:36:12 PM »
The aircraft selling price suggestion is now online.

For now it also displays the "calculated value" (same as before) but later it will be replaced by "book value".

The selling price suggestion takes into account in it's price suggestion the following:
 - valid C/D checks?
 - how many other planes of the same fleet group are for sale (this has a rather large emphasis)
 - how many ... are in operation
 - how many ... are in order
 - age and condition

Please test around and see if you get any strange results. You can always edit the price manually still like before if it gives strange suggestions..



Few examples:

- JA -
 B707, 14yo - current calc. value $21m, recommended selling price $6m   .. reason => most 707s seem to be scrapped already, only 90 in ops, old plane
 B727, 9yo - current calc. value $16m, recommended selling price $10m  .. lots of 727s in operation, but only rather few orders for it and many for sale
 DC-8, 16yo, - current calc value $18m, recommended price $5m ... same reasons as B707
 DC-10, 8yo, valid checks, calc.value $47m, recommends $61m .. many in operation/ordered
 DC-10, 8yo, invalid checks, calc.value $47m, recommends $56m


- MT -
B737-900, 0yo, val $85m, rec $128m
A318, 0yo, val $72m, rec $109m
AN-148, 0yo, val $24m, rec $16m

- DOTM -
737-200, val $11m, rec $3m
737-300, val $36m, rec $53m
A320, val $50m, rec $75m

(figures rounded)


Haven't checked it as I'm on my phone but does this mean the price floor has been removed? Last I checked selling at below 60% of value required a long sit on the market.

Also, in theory, reccomended price should never be below scrap value.....

BD

  • Former member
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #85 on: December 21, 2013, 10:06:08 PM »
How does this impact selling price limitations, if at all?

Offline Monica

  • Members
  • Posts: 694
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #86 on: December 22, 2013, 03:17:40 PM »
My brand new Beech 1900D were suggested selling price for 2 million, and value at 7. :) Of course I can't sell them that cheap.

Offline LemonButt

  • Members
  • Posts: 1895
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #87 on: December 22, 2013, 06:05:58 PM »
sami--if the aircraft value is purchase price - depreciation, what happens when the purchase price is discounted by the various items (launch customer, large order, etc)?  A $20 million aircraft purchased for $18 million with discounts is worth what?  The deprecation should be based on an assets going from $18 million to $0, but the calculated book value when listing it should be based on the $20 million, correct?

Offline LemonButt

  • Members
  • Posts: 1895
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #88 on: December 22, 2013, 06:36:00 PM »
Also, how easy would it be to extend the current income statement to go more than 4 weeks back?   There are approximately 6 game weeks in a real life day, so if you go 24 hours without checking in you can't see the previous weeks performance without looking at graph plots etc.

Offline schro

  • Members
  • Posts: 3076
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #89 on: December 26, 2013, 04:55:33 AM »
A couple thoughts that I've had surfacing in my head that I think are quite relevant to total valuation as well as making older frames more interesting to fly.

1. Asset value should be impacted by the D checks performed on them as they should be a capitalized cost that is deducted over the course of the D check's life. Therefore, suppose a 25 year old DC9 has a book value of zero and all checks are expired. The airline can then chose to scrap it for market value of the scrapping OR invest in a D check to bring it current, but also increasing the book value by the amount of money spent on the D check.

2. The 35 year cap on aircraft age should be lifted to 50 years as some bird types are capable of providing service for that long and will allow the additional D checks to be more of an economic decision.

I suspect decisions will change from the current scenario of early scrapping/selling/parking and the average age of planes will increase with the current proposed accounting changes.

Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #90 on: December 28, 2013, 12:47:37 AM »
cashflow statement (still beta) has now charts also for the sub-items (like sold tickets).

Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #91 on: December 28, 2013, 06:33:19 PM »
Cashflow statement includes how a very crude version of browsable history of the data.

Please test the usage.    ... /game/Office/Cashflow/     ...first RELOAD the page to load the latest script file. You will see a 'time period' dropdown selector at the top right corner of the data area, and that allows you to move back and forth in the data history. (will perhaps add separate back/forward buttons later?)

Same system will be implemented to the new income statement also.

And with this the cash flow sheet is ready... If you have some feedback on it, please be quick; I don't intend to make any changes to it for a very long time after this history UI is complete.
« Last Edit: December 28, 2013, 07:09:09 PM by sami »

Offline [ATA] b757capt

  • Members
  • Posts: 703
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #92 on: December 29, 2013, 10:04:52 PM »
Sami,

Overall I like these changes. However I do not understand why there are limits on sale/purchase price of aircraft and the time in which you can scrap.

If the overall system values are correct I should be able to scrap any age aircraft and sell any aircraft for any price. Regardless of inter alliance or not.

Also, why remove the actual dollar amount of the aircraft? I believe the buyer should get to see the appraisal value of what they are buying.

Thanks for listening.

b757capt

Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #93 on: January 01, 2014, 06:37:01 PM »
A new (beta) version of the income statement is usable here: http://www.airwaysim.com/game/Office/Incomes/New/

This contains a new format of the page, browsable history data, and graphs also for individual base airports.

The data itself is still the same as in current income statement, so the pre-payments and such are not correct yet.

Please check that all values match the current/old income statement, and otherwise that everything works in the UI. I shall work on the actual changes of the data (taxable expenses..) later.

Offline dmoose42

  • Members
  • Posts: 1264
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #94 on: January 01, 2014, 08:33:12 PM »
Sami, a couple of items...

1) I noticed that we have a depreciation line item on the income statement, but not one on the cash flow statement (yet).  I assume you will drop it into the cash flow from operations section, but just wanted to check on that.

2) On the Income statement, does it make sense to organize things with the operating expenses section by category (SG&A, flight ops, salaries and training, MX, etc.)

3) Why are fuel contracts an 'other' expense and not an operating expense?  Given that they are a weekly expense and directly offset fuel expense, it probably makes sense to put them as an operating expense.

4) I very much like the new concept/format that results in operating income totals as well as before tax totals - the one thing that may be useful (although somewhat duplicative with cash-flow statement i know), is to have an operating income ex depreciation line.

Thanks for your consideration.


Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #95 on: January 01, 2014, 09:11:32 PM »
1- Normally indeed the result of income statement should be the same as the first line in cashflow statement (net income) and then cashflow should have a second line were non-cash items are removed from the net income to reconcile with the cash balaance.... However I left this out to keep it (cashflow statement) simple. ..not very hard to add if needed, but I think it may be confusing to some?

2- it's a bit hard to add further subcategories there (or not THAT hard but ...still)

3- contract costs are not in my mind direct operational costs ... (ie. contract fee and hedge fee). But this can be debated ..

Offline [ATA] b757capt

  • Members
  • Posts: 703
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #96 on: January 01, 2014, 09:16:34 PM »
1- Normally indeed the result of income statement should be the same as the first line in cashflow statement (net income) and then cashflow should have a second line were non-cash items are removed from the net income to reconcile with the cash balaance.... However I left this out to keep it (cashflow statement) simple. ..not very hard to add if needed, but I think it may be confusing to some?

2- it's a bit hard to add further subcategories there (or not THAT hard but ...still)

3- contract costs are not in my mind direct operational costs ... (ie. contract fee and hedge fee). But this can be debated ..

I can tell you at my RL airline the operational costs include all contracts on the P&L.

Offline dmoose42

  • Members
  • Posts: 1264
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #97 on: January 01, 2014, 10:15:01 PM »
Thanks for quick reply Sami.

on 1) I think that we need to have depreciation subtracted out on the cash flow statement (or added back depending on how you look at things).  If you don't want to do that, then can you add a row on the income statement that has operating income excluding depreciation???

And on a second note, I noticed that new aircraft deliveries are being assigned a book value of the purchase price instead of the current market price.  If I get a 20% discount on 40 A320's that will arrive in 5 years.  Shouldn't we have the book value equal to what it would cost to buy that plane new on that day (for simplicity's sake).

And third, how is salvage value determined with the new book value.  I would think that salvage value should be unrelated to book value, but it wasn't clear in the comments how the salvage value would be determined going forward.  Can you clarify?
« Last Edit: January 01, 2014, 10:20:40 PM by dmoose42 »

Offline AndreiX

  • Members
  • Posts: 139
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #98 on: January 02, 2014, 12:45:40 AM »
I know it has been asked before, but I think the problem is not yet clarified, so here it goes:
I`ve noticed that the Book value of the aircraft is actually the price we payed for the aircraft (with all discounts and inflation benefits we gained while our money was blocked at the manufacturer not taken into consideration), so I assume that this book value will be added to the company value (and not the current market price of the same brand new aircraft).
1. Have I got it right up to here?
2. I am not exactly sure how the insurance is calculated, but I have some idea and I believe that it should be calculated at the same book value, so we should benefit from here, right? (Although, as I recall, in RL my brand new car was insured at its full value without the discounts I got from the dealer.)
3. I have also noticed that if I try to use one of these planes as a security asset in a loan, its value is somewhat oddly different: it is not the book value or the current aircraft market value... it is somewhere in the middle... I assume it is the recommended selling price or is there a third value somewhere?
4. So the plane depreciates from day 0 to 25 years, when it will reach 10% of its book value. If at 10 years I want to scrap that plane I will get something like: (book value-40%)*30% or market value*30%?
Sorry for giving headaches, but I really want to understand it all.
« Last Edit: January 02, 2014, 12:48:57 AM by AndreiX »

Offline Sami

  • Administrator
  • Members
  • Posts: 14538
    • AirwaySim - Are you the next Richard Branson?
Re: Profit vs. Cash flow, Accounting, Income statement
« Reply #99 on: January 02, 2014, 01:16:43 AM »
A very quick draft of the balance sheet is here: http://www.airwaysim.com/game/Office/Balance/

It only displays zero values so far.  ... mainly visible to test so that we can discuss of the items needed. This eventually replaces the company value page. And before anyone asks, intangible assets = airport slots.

Also the depreciation is added to cash flow statement (as an expense in ops costs, and then adjusted as non-cash expense on its own line later there). So the line 'Operating profit / loss' in incomesheet is now the same as 'Net operating profit / loss' in cashflow statement like it is in all 'real' financial reports too.. Also some UI formatting changes..


Answers to prev. msg:
- Book value is what you paid for the plane, yes (value gains due to inflation aren't in my mind something that should be taken into account). And it will be shown at balance sheet (and for now at company value too already, but company value page and metric will be remoevd). And that purchase/initial book value amount is not directly tax-deductable like we have currently, but you will depreciate the value of the aircraft over years and each year/month/etc this depreciation will be counted to the profit/loss statement thus decreasing your taxable income. (for transition all aircraft already bought in this old system will be treated as fully depreciated)

- Insurance is calculated by the insurance broker, and they have a separate calculation for the valuation there, not related to book value. (ok, one could think that insurance is only for the book value at max, but insurance also includes third-party liability etc) .. so not relevant here really.

- Same for loan security; your book value is not related to what bank thinks they can secure it for (= what bank sees they can get for the plane in case you cannot pay the loan). This has been also mentioned in the changelogs.

- If you have a plane that has a book value of $10mil and you sell/scrap it and they pay you $20mil, then you have $10mil profit. And the other way around. ..simple.

(..so again. Forget everything about the old aircraft value thing.)
« Last Edit: January 02, 2014, 01:28:09 AM by sami »

 

WARNING! This website is not compatible with the old version of Internet Explorer you are using.

If you are using the latest version please turn OFF the compatibility mode.