when a managerial accountant performs cash flow analysis he will consider the cash inflow or outflow generated as a result of a specific business decision for example if a department manager is considering purchasing a company vehicle he may have the option to either buy the vehicle outright or get a loan a managerial accountant may run different scenarios by the department manager depicting the cash outlay required to purchase outright upfront versus the cash outlay over time with a loan at various interest rates 
inventory turnover is a calculation of how many times a company has sold and replaced inventory in a given time period calculating inventory turnover can help businesses make better decisions on pricing manufacturing marketing and purchasing new inventory a managerial accountant may identify the carrying cost of inventory which is the amount of expense a company incurs to store unsold items if the company is carrying an excessive amount of inventory there could be efficiency improvements made to reduce storage costs and free up cash flow for other business purposes managerial accounting also involves reviewing the constraints within a production line or sales process managerial accountants help determine where bottlenecks occur and calculate the impact of these constraints on revenue profit and cash flow managers then can use this information to implement changes and improve efficiencies in the production or sales process financial leverage refers to a company s use of borrowed capital in order to acquire assets and increase its return on investments through balance sheet analysis managerial accountants can provide management with the tools they need to study the company s debt and equity mix in order to put leverage to its most optimal use performance measures such as return on equity debt to equity and return on invested capital help management identify key information about borrowed capital prior to relaying these statistics to outside sources it is important for management to review ratios and statistics regularly to be able to appropriately answer questions from its board of directors investors and creditors appropriately managing accounts receivable ar can have positive effects on a company s bottom line an accounts receivable aging report categorizes ar invoices by the length of time they have been outstanding for example an ar aging report may list all outstanding receivables less than 30 days 30 to 60 days 60 to 90 days and 90 days through a review of outstanding receivables managerial accountants can indicate to appropriate department managers if certain customers are becoming credit risks if a customer routinely pays late management may reconsider doing any future business on credit with that customer budgets are extensively used as a quantitative expression of the company s plan of operation managerial accountants utilize performance reports to note deviations of actual results from budgets the positive or negative deviations from a budget also referred to as budget to actual variances are analyzed in order to make appropriate changes going forward managerial accountants analyze and relay information related to capital expenditure decisions this includes the use of standard capital budgeting metrics such as net present value and internal rate of return to assist decision makers on whether to embark on capital intensive projects or purchases managerial accounting involves examining proposals deciding if the products or services are needed and finding the appropriate way to finance the purchase it also outlines payback periods so management is able to anticipate future economic benefits managerial accounting also involves reviewing the trendline for certain expenses and investigating unusual variances or deviations it is important to review this information regularly because expenses that vary considerably from what is typically expected are commonly questioned during external financial audits this field of accounting also utilizes previous period information to calculate and project future financial information this may include the use of historical pricing sales volumes geographical locations customer tendencies or financial information 