Terotechnology

AAA

DEFINITION of 'Terotechnology'

A word derived from the Greek root word "tero" or "I care", that is now used with the term "technology" to refer to the study of the costs associated with an asset throughout its life cycle - from acquisition to disposal. The goals of this approach are to reduce the different costs incurred at the various stages of the asset's life and to develop methods that will help extend the asset's life span.

Terotechnology uses tools such as net present value, internal rate of return and discounted cash flow in an attempt to minimize the costs associated with the asset in the future. These costs can include engineering, maintenance, wages payable to operate the equipment, operating costs and even disposal costs.

Also known as "life-cycle costing".

INVESTOPEDIA EXPLAINS 'Terotechnology'

For example, let's say an oil company is attempting to map out the costs of an offshore oil platform. They would use terotechnology to map out the exact costs associated with assembly, transportation, maintenance and dismantling of the platform, and finally a calculation of salvage value.

This study is not an exact science: there are many different variables that need to be estimated and approximated. However, a company that does not use this kind of study may be worse off than one that approaches an asset's life cycle in a more ad hoc manner.

RELATED TERMS
  1. Net Present Value - NPV

    The difference between the present value of cash inflows and ...
  2. Common Business Oriented Language ...

    A type of language used in computer programming. Common Business ...
  3. Discounted Cash Flow - DCF

    A valuation method used to estimate the attractiveness of an ...
  4. Internal Rate Of Return - IRR

    The discount rate often used in capital budgeting that makes ...
  5. Operating Expense

    A category of expenditure that a business incurs as a result ...
  6. Capital Budgeting

    The process in which a business determines whether projects such ...
Related Articles
  1. Understanding The Time Value Of Money
    Investing Basics

    Understanding The Time Value Of Money

  2. Forces That Move Stock Prices
    Active Trading Fundamentals

    Forces That Move Stock Prices

  3. Taking Stock Of Discounted Cash Flow
    Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

  4. Executing A Swot Analysis
    Investing Basics

    Executing A Swot Analysis

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center