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Key TreeCents
Elements
 | EXCEL™ template operations |
| Button navigation |
| Four alternative land use investment options |
| Data organization formatting |
| Hidden automatic calculations |
| Cost, Revenue & Financial Feasibility reports |
| Standard financial indicators |
| Four types of omnipresent help toggles |
A TreeCents
example manual is available on-line (see manual page)
What is TreeCents
Doing and How Does it Do it?
| TreeCents runs in MS-EXCEL™ because that program is widely
available and constant updates recognize old programs. Our visual basic
programming converts general Excel spreadsheets into forestry investment data
and output templates. This makes TreeCents an easy and accessible platform for
novice and advanced users alike. No additional programming is necessary
although you will have to reset your Excel security to medium so that it will
read the visual basic macros we use to organize and process TreeCents
analyses. |
| During each session, users have the choice of analyzing new
timber plantation investments, treatments of existing forests, or agricultural
and pasture uses of the same land base. It is possible to load and compute all
four project formats simultaneously and compare relative use profitability by
similar criteria. |
| TreeCents relies on visual basic programming (that users
never see) to organize the program so that all
the ugly data transformations and mathematical operations are hidden. Users just push buttons to visit only the
small subset of 150 analytical windows needed to put together a unique timber
(or other land use) investment project specifications. |
| Every project data window is designed to organize user thinking
about the kind of information that might be relevant to their timber investment. There are
distinct, logically grouped, data entry points that are based on how forest owners and
foresters visualize projects. There are default project example entries to
demonstrate how data inputs should look. Behind the scenes, the program then reorganizes the data
and processes it into
the required formats for the complicated mathematics of financial analysis. |
| TreeCents takes the separate forestry variables such as
acres and volumes and combines them with cost and revenue information to
calculate expected cash flows in known years. Behind the scenes, TreeCents also adjusts
cash flows for inflation, real change rates of prices and costs so users just
have to specify whether things are changing, but don't have to do the very
messy adjustments. |
| The cash flows are tracked in before and after-tax formats.
TreeCents adjusts cash flows for their after-tax equivalents according to a
unique user-specified federal, state, and local tax environment. Tax
computations are interactive where necessary, recognizing ordinary income and
capital gains tax interactions, yield-severance-productivity timber taxes, and
ad valorem property taxes. These include amortization, tax credits,
cross deductibility, capitalization requirements and cost basis depletion. |
| TreeCents reorders cost and benefit streams and reports
them to users in clear report formats so users can check whether their entries
are complete and accurate. Individual project data sets themselves can be read
by non-geek humans. The can be saved for archiving purposes, reporting or to
serve as the basis for designing subsequent projects as many different timber
projects have great similarities in their data requirements. |
| The imbedded financial calculation modules automatically
identify cash flow patterns, interactions and contingencies. They match user
needs to the
appropriate financial formulas and redesign the formulas appropriately for the unique project design. These
calculate present equivalent values in the patterns and formats needed to
represent the desired financial criteria. It reports these criteria in one
page with before-tax and after-tax values. |
| Reported financial criteria include two absolute wealth
effect measures that are common to forestry: Net Present Value (NPV/acre) and
Soil Expectation Value (SEV/acre). Both of these criteria sum the present
equivalent of the long irregular pattern of forestry cash flows. The
difference is that SEV is calculated from infinitely repeated rotation cycles
of the same harvest pattern, where NPV only calculates the present equivalent
value of one cycle. For plantations started from bare land, NPV and SEV
converge as rotatation cycle length increases much beyond 60 years. |
| TreeCents warns users when criteria such as SEV and NPV are
not comparable. For example, an uneven-age harvest series starting from an
almost mature stand will always have an NPV larger than a plantation SEV.
That's because one timber investment starts from a large bundle of dedicated
forest capital (land plus lots of inventory) and the other starts from a
little (just bare land). TreeCents tries to warn you about any similar tricky
computational or interpretive step. |
| Relative criteria are really useful for comparing between
projects with unlike starting points or land uses. TreeCents relative criteria include
the banker's preferred "Realizable Rate of Return" (RRR). RRR is a
modern formulation of internal rate of return or return on investment that measures how
hard investment capital is working in per cent per year terms. This makes
timber investments directly comparable to non-forestry projects and financial
instruments such as bonds or certificates of deposit. TreeCents also
calculates the farmers friend "Equivalent Annual
Income" (EAI). EAI converts forestry's irregular long-run cash flows into
an annual equivalent net dollars per acre figure that you may directly compare
to annual crop and grazing projects. Relative indicators come from converting
present value patterns into appropriate ratios that change a criterion's
function. TreeCents is smart enough to
remember something that most analysts forget--to normalize relative criteria
for the amount of initial non-cash capital invested to remove investment scale biases. |
| Looking into the future is an uncertain occupation. That's
why TreeCents is set up for automatic bet-hedging. Users can specify the
degree of pessimistic and optimistic futures. TreeCents calculates how cash
flows change to represent these project brackets around the base case data
input. So in the final report, you can see your own idea of how badly or
wonderfully each project could turn out instead of looking only at one base
case outcome. |
| All the while, TreeCents realizes that some of its humans
will need advice on what things are, what processes are going on, where to get
data, how to interpret things and where to go for help. That's why four
different types of program feedbacks are built in. Alarm bells, help and
definitions, interpretive guides, and a complete user manual including a
tutorial are designed to toggle into view with the touch of buttons in almost
every window. |
| The real utility of a financial analyzer is as a
simulator. TreeCents uses loop navigation from results straight back to the
project's appropriate starting point. This accelerates your ability to get a project designed,
check out its financial implications and then rerun it quickly with small
variations. This is really useful for three reasons: (1) you may want to check
the sensitivity of data you're not sure about, such as interest rates or
harvest volumes; (2) by running different silvicultural regimes for the same
project, you can search for the one that gives you the best financial results;
and finally, (3) you can build in non-timber considerations such as wildlife
habitat improvement and measure how much including other management objectives
into timber projects costs you. As many aesthetic, ecological, conservation
and wildlife objectives are complementary with the right kind of timber
designs, you'll be surprised how easily a private forest owner can have it
all--achieve multiple non-market objectives profitably. |
The easiest way to see if
TreeCents
would work for you is to buy one today. See our pricing and order information
page.
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