Financial Analysis

2018 ◽  
pp. 152-192
Keyword(s):  
Risk Analysis ◽  
Feasibility Study ◽  
Final Stage ◽  
Financial Analysis ◽  
Investment Project ◽  
Theoretical Explanation ◽  
Fixed Costs ◽  
Working Capital ◽  
Manufacturing Costs ◽  
Basic Purpose

The market and technical analyses aim at finding out whether or not the conceived product of the investment project is marketable and that its production is technically feasible. If the product is marketable and the investment project is technically feasible, then a detailed financial analysis is required. The basic purpose of the financial analysis as the final stage of a feasibility study is three fold: (1) to compute the total amount of the investment needed for realizing the project and decide how it would be financed, (2) to estimate the total amount of annual manufacturing costs for the production process as well as the total amount of annual sales revenues expected during the operating period, and (3) to evaluate the profitability of the investment on the basis of the costs and sales revenues associated with the investment project. If the investment project is profitable, then a risk analysis is conducted to evaluate its riskiness so as to decide about its desirability. Accordingly, the financial analysis stage is the backbone of this book. However, a chapter that would include these three subjects must necessarily to be very large in size and complicated in content. Therefore, in order to prevent this complication and provide a clear theoretical explanation for the final stage of a feasibility study, the financial analysis stage is divided into three consecutive and complimentary chapters on the basis of the objectives stated above. Thus, this chapter is confined to the first objective in the sense of computing the total amount of investment in terms of the fixed capital (fixed costs) and the working capital, determining sources of financing, and estimating annual operating expenditures and expected sales revenues.

scholarly journals MODELS FOR FORMING BUSINESS PROJECT INDICATORS AT THE PRE-PROJECT STAGE OF INVESTMENT EFFICIENCY ASSESSMENT IN THE FORM OF CAPITAL INVESTMENTS

2020 ◽  
Vol 3 (33) ◽  
pp. 132-138
Author(s):  
R.A. Maisky ◽  
◽  
G.Z. Nizamova ◽  
Yu.A. Pavlova ◽  
◽  
...  
Keyword(s):  
Feasibility Study ◽  
Investment Project ◽  
Investment Efficiency ◽  
Capital Investments ◽  
Working Capital ◽  
Investment Performance ◽  
Investment Projects ◽  
Flow Of Funds ◽  
Fixed Assets ◽  
The Cost

When assessing the value of capital investments, they often do not pay due attention to those capital investments that are associated with the formation of a sufficient amount of working capital, focusing on fixed assets. Meanwhile, capital investments in the project working capital formation are necessary to cover the costs of the preparatory process, inventory formation, and the creation of a reserve for the period until payments are received for receivables on products sold. During the period of acquisition of assets, one of the important components of investment costs, along with capital expenditures in fixed assets and intangible assets, is net working capital, which is the cost of increasing working capital (current assets). It should also be noted that when evaluating the effectiveness of real investment projects at the stage of feasibility study, it is neither possible nor necessary to calculate net discounted income for individual periods, since at this stage of analysis, it is unlikely that annual differentiation of costs and results will be provided. Thus, when determining the effectiveness of an investment project at the stage of pre-feasibility study of the main decisions, it is justified to use simplified calculations of operating results based on annuity models. An important problem should be recognized as modeling the mechanism for returning invested amounts. To ensure the adequacy of the algorithm taking into account the reimbursement of non-recurring costs in the calculation of investment performance should take into account the flow of funds sinking Fund (in the form of means for reproduction of fixed assets and the depreciation; or funds that ensures return on investment). In the same section, the organization's assets that remain after the end of the business project should be taken into account. In the article, the authors present the improvement of the model for forming business project indicators at the pre-project stage of evaluating the effectiveness of investments, taking into account all these aspects.

scholarly journals Sustainability Assessment of White Shrimp (Penaeus vannamei) Production in Super-Intensive System in the Municipality of San Blas, Nayarit, Mexico

Water ◽  
2021 ◽  
Vol 13 (3) ◽  
pp. 304
Author(s):  
Favio Andrés Noguera-Muñoz ◽  
Benjamín García García ◽  
Jesús Trinidad Ponce-Palafox ◽  
Omar Wicab-Gutierrez ◽  
Sergio Gustavo Castillo-Vargasmachuca ◽  
...  
Keyword(s):  
Sustainability Assessment ◽  
Financial Analysis ◽  
Positive Impact ◽  
Mangrove Ecosystem ◽  
White Shrimp ◽  
Penaeus Vannamei ◽  
Fixed Costs ◽  
Farm Model ◽  
Intermediate Value ◽  
Intensive System

The super-intensive white shrimp system is more productive (t ha−1) than traditional systems. However, it implies greater investment in infrastructure and machinery, a continuous supply of electricity, and a specialized workforce. Therefore, the sustainability of a shrimp farm model operating in a super-intensive system in Nayarit (Mexico) was evaluated using financial analysis and life cycle assessment. The investment is important, but the fixed costs (16%) are much lower than variable costs (84%). The super-intensive farm is economically viable, with an overall profitability (29%) that is higher than that of other agri-food activities in Mexico. It is also an activity that generates a lot of employment, in relative terms, as well as economic movement in the area. The potential environmental impacts are higher than those registered in semi-intensive shrimp systems but slightly lower than those registered in intensive systems. The estimated global warming value per kg of shrimp is 5.08 kg CO2-eq, an intermediate value. Also, as the shrimp production is much higher than in traditional systems, it could have a great and positive impact on the maintenance and regeneration of the mangrove ecosystem.

Valutazioni di convenienza e di sostenibilitŕ per le imprese del comparto del Prosciutto di Parma Dop: un'analisi attraverso l'applicazione di indici economici e finanziari

2012 ◽  
pp. 61-98
Author(s):  
Giuseppe Bonazzi ◽  
Mattia Iotti ◽  
Fabio Paduano
Keyword(s):  
Economic Analysis ◽  
Financial Analysis ◽  
Capital Requirements ◽  
Financial Ratios ◽  
Financial Sustainability ◽  
Working Capital ◽  
Significant Difference ◽  
Fixed Assets ◽  
Firm Management ◽  
High Absorption

Parma Pdo Ham sector is characterized by the great presence of small and medium sized enterprises (SMEs) and by high absorption of capital to finance investments in fixed assets and working capital. The aging of pork leg causes in fact a high capital requirements for a period of at least 12 months and even 18/24 months. In that case, economic analysis and financial analysis may show different results, since situations of non-financial sustainability even in case of positive profitability. The paper covers the methodology for the analysis of the profitability and sustainability of firm management and suggests specific indices to analyze the firms of the sector. The analysis show that there is a statistically significant difference between economic and financial results in the sector and the application of financial ratios proposed in the paper can better assess the sustainability of management. These ratios can find applications even in other sectors characterized by high capital absorption, particularly net working capital.

Technical Analysis

2018 ◽  
pp. 110-151
Keyword(s):  
Foreign Direct Investment ◽  
Network Analysis ◽  
Feasibility Study ◽  
Direct Investment ◽  
Investment Project ◽  
Technical Analysis ◽  
Production Facility ◽  
Technical Aspects ◽  
Total Cost ◽  
Second Stage

A comprehensive feasibility study should continue with a technical analysis if the market analysis, as explained in the chapter, defines a sufficiently large market share for the product to be manufactured through a foreign direct investment project. The technical analysis as the second stage of a feasibility study aims at determining whether or not the production of the marketable product is technically feasible in terms of what the production technology will be, how the production process is to be designed, and where the production site would be located in the country selected. This chapter covers topics and discussions about technical aspects of establishing a production facility. Thus, it answers the question of whether the production of a product that is determined to be marketable is technically possible and, if so, how the production facility should be designed. If the investment project is technically feasible, then an implementation plan through project programing techniques of network analysis is developed for both estimating the total cost of fixed investment and planning the establishment of the plant or factory required. Thus, at the end of the technical analysis stage, the use of project programing techniques is explained for planning the implementation of an investment project.

Preparation of Long Term Operation in Dukovany NPP, Czech Republic

2009 ◽  
Author(s):  
Robert Krivanek
Keyword(s):  
Czech Republic ◽  
Risk Analysis ◽  
Feasibility Study ◽  
Regulatory Body ◽  
Original Design ◽  
Term Operation ◽  
Safety Aspects ◽  
Program Strategy ◽  
The Status

Dukovany NPP has 4 units with VVER440/213 type reactors and is in its 24th year of operation. Operational permission is valid for 30 years. Since 2004, NPP has started to prepare a LTO program which includes: • a detailed feasibility study, • an evaluation of safety aspects of LTO, • the preparation of a long-term modernization plan, • risk analysis etc. This program is now approved by company management and by the Czech regulatory body. It should enable operation up to 60 years. The article gives information about the status of the NPP Dukovany long-term operation (LTO) preparation. It gives an overview of results of the prepared LTO Assurance Program, Strategy of the NPP Dukovany LTO, along with risk analysis. The article details the procedure for the NPP Dukovany preparation for operation beyond the limits of original design lifetime, and ensuing planned stages.

WORKING CAPITAL AS AN ENTERPRISE VALUE ASSESSMENT TOOL

2019 ◽  
Vol 6 ◽  
pp. 603
Author(s):  
Inta Bruna ◽  
Inta Millere
Keyword(s):  
Stock Price ◽  
Evaluation Method ◽  
Research Study ◽  
Assessment Tool ◽  
Financial Analysis ◽  
Value Assessment ◽  
Working Capital ◽  
Financial Reports ◽  
Corporate Managers ◽  
The Impact

The valuation of an entity in off-exchange transactions involves the use of different techniques. Nevertheless, none of them guarantees the most accurate result. Therefore, it is very difficult to choose one evaluation method. Both investors, corporate managers, financial professionals, portfolio managers, and securities analysts should have a basic understanding of the process of evaluating companies. To that end, professionals recommend evaluating a company’s financial reports to detect its financial position and solvency. According to the methods of financial analysis, working capital is one of the solvency ratios, which describes the value of resources that remain after the company’s current liabilities have been bared. The research study is aimed at determining the impact of changes in working capital on the valuation of a company. In order to achieve the aim and confirm or deny the hypothesis, the methodological basis for the research study was developed, necessary information was collected, calculations were performed using data from companies listed on Nasdaq OMX Riga, and the obtained results were analysed. Literature review and economic and statistical analysis, including the SPSS method for assessing the effects of working capital and stock price, were used in the research.

Application of Monto-Carlo Method in HR Investment Risk Evaluation

2010 ◽  
Vol 458 ◽  
pp. 131-136
Author(s):  
Jing Jing Lu ◽  
Xuan Xi Ning
Keyword(s):  
Risk Analysis ◽  
Human Resources ◽  
Computer Program ◽  
Risk Evaluation ◽  
Investment Project ◽  
Investment Risk ◽  
Project Risk ◽  
Index Function ◽  
Project Risk Analysis

Monto-Carlo method is widely used for project risk analysis. Evaluating the risk in HR (Human Resources) investment project, which is of hi-investment and hi-return, by Monto-carlo method is a new attempt. In this paper, by taking cost, profit and risk in the HR investment as index, emulation model of HR investment and index function of risk evaluation were established. Simulation about the whole investment course was done by computer program using Monto-Carlo method. Case study of HR investment risk evaluation was done later using concrete data.

New Construction Methodology - A Strategic Approach of Financial and Market Feasibility for Geothermal Cogeneration Plant

2014 ◽  
Vol 984-985 ◽  
pp. 774-783
Author(s):  
Prakash Arul Jose ◽  
Rajesh Prasanna ◽  
Fleming Prakash
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Financial Analysis ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Cogeneration Plant ◽  
Investment Projects ◽  
Internal Rate ◽  
Financial Feasibility

Abstract-While constructing the geothermal cogeneration plant the success of the projects depends upon its financial and market feasibility. A new optimization method is used to estimate financing requirements of investment projects will be presented, as well as a new method to predict the optimal year to sell the investment. A case study is used to illustrate the use of a model to assess the financial feasibility of a geothermal cogeneration plant. The conclusion is that Net Present value , Internal rate of Return and Modified Internal rate of Return should be used to assess financial feasibility of investment projects. In addition to calculating the financial feasibility criteria, assessment models should allow the user to perform sensitivity analysis, scenario analysis, and simulation to analyze risk associated with the investment project. Risk probability matrix is used to obtain the risk priority , which then continued with financial analysis for the feasibility study and also sensitivity analysis. The study shows that the parameter investment value will be increased when treatment is done on risk.Keywords:Financial and market feasibility, Geo thermal cogeneration plant, Environmental Aspects, Sensitivity analysis.

scholarly journals Feasibility Study on a Micro Hydro Power Plant at Coban Jahe Waterfall, Jabung, Malang Regency

2021 ◽  
Vol 6 (1) ◽  
pp. 41-52
Author(s):  
Sudarman Sudarman ◽  
Wahyu Guszolil ◽  
Daryono Daryono ◽  
Muhammad Lukman
Keyword(s):  
Power Plant ◽  
Electric Power ◽  
Feasibility Study ◽  
Financial Analysis ◽  
Water Discharge ◽  
Payback Period ◽  
Small Scale ◽  
Hydro Power ◽  
Tourist Attractions ◽  
Project Life

Micro Hydro Power (MHP) Plant is a small-scale power plant under 100 kW. Generally, MHP is built in a place that the electricity network has not touched. Many waterfalls in Taji Village are only used as tourist attractions. One of them is Coban Jahe waterfall which has a water discharge of 0.60567 m3/s in the dry season. Waterfall in Coban Jahe was used and planned as Micro Hydro Power Plant, it was called as MHP. Potential electric power generated from the MHP Coban Jahe Waterfall is 14.0368 kW with an effective head of 3.4742 m. The results show from the financial analysis, the construction of MHP is quite feasible with NPV of Rp. 45,676,769, BCR of 1.0852, which means it is feasible to be continued, the Payback Period is 9 years which does not exceed the project life, and the IRR obtained is 10,0087% which the projects are feasible and profitable to build.

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