MA.8:4.5 - Compare the whole account and the future change

Calculate the observed and conditional period results on the stated basis. Preserve the acquisition boundary, relevant survival or purchasing assumptions and timing. If a limited horizon is used, state what lies outside it; do not call a three-month total a complete lifetime value.

Test the plausible changes that could alter the decision: retention, service intensity, refunds, collection, acquisition cost or a supply threshold. A valuation use obtains the applicable discounting and risk treatment from the relevant financial method.

For a continuation or expansion choice, establish the future baseline without the proposed action, including obligations already created. Construct the alternative with its changed quantities, supply and obligations at the same dates. Subtract the baseline from the alternative to obtain the future difference. Historical development, acquisition or production can explain cumulative recovery without becoming an avoidable payment. An obligation common to both futures cancels from their difference but remains in each whole cash account.

Supply the qualified future differences to OPS.14 or the responsible financial practice. Use the whole dated cash account for liquidity, including unchanged obligations and other receipts. Discounting, taxes, risk and financing require the applicable financial method; an undiscounted operating total does not decide those questions.