Organization and Management - report on the feasibility of investment projects

The success of investment projects depends largely on the ability of those responsible for their management. The feasibility study should investigate the legal status of the organization, staffing and the ability of management and staff.

The banks lend their funds to projects on the trust that individuals who promote or operate them have the character and integrity and would be able to manage the funds of good credit. They ensure that project managers have a good purpose, structure, human resource capacity, and experience of key personnel and institutions applicants have the integrity to invest the funds well and deserves as and when due.

Financial Analysis

This project addresses the costs and revenues and the adjustment costs and revenue in order to determine the profitability and viability of the investment project.

Project (Capital) Cost

This should be followed by a good technical analysis, the cost of all items, including machnery, equipment, facilities, furniture and fixtures and motor vehicles (if needed) should be determined. This cost also includes working capital and contingencies. If the project cost is underestimated, the project may have cost overrun and may be abandoned halfway through because there is no guarantee that additional funds can be obtained. If you calculated above, there are a number of negative consequences.

Financing of projects

The financing plan indicates the level of funding that will be provided by the promoters of the project and the level of support that may be required from external sources. The success in external funding usually depends on the financial commitment of the promoters and finacial returns expected from the project.

Estimated operating costs

The cost estimate here usually include raw materials, fuel, labor, maintenance, marketing and distribution, general administrative expenses. Operating costs include insurance, depreciation costs and interest on loans. Accurate estimate of costs is especially important for credit projects and funds, as would be expected to be self-sufficient.

Revenue estimates

Revenues are primarily derived from the sale of products and service charges.

Revenues should be sufficient to cover:

. Cost of operation

. interest paid on debt

. Loan repayment

. Maintenance of fixed assets

. The expected profits on investment.

Estimated revenue needless to say, must be realistic.

Balance

The financial analysis of investment project includes the preparation of financial statements provided, as follows

. Pro-forma cash flow statement

. Pro-forma profit and loss (income) statements

. Pro-forma balance sheet

Types of Financial Analysis

. Turnover

. Break-even point

. Liquidity

. Profitability

. Cost-benefit

. Sensibility

Evaluation Criteria

. Pay Back Period PBP)

. Accounting Rate of Return (ARR)

. Internal Rate of Return (IRR)

. Net Present Value (NPV)

Conclusion

The decision on the project can be significantly improved by undertaking a feasibility study. It forms the basis of systematic collection and analysis of data and provides authoritative advice, independent and objective about the new project. Feasibility studies is not a guarantee irrefutable proof that a particular investment project or venture will be successful ....