Evaluation of any investment project depends on the financial viability of the entire enterprise. It is worth considering the different analysis methods used to predict the capital investment plan.
Instructions
Step 1
Apply the conditional highlighting method. It is appropriate when the project is independent of the enterprise. For this, it is presented as a separate legal entity with its liabilities and assets, costs and proceeds. Using this technique, you can assess the growth efficiency and financial viability of the project. But he assumes errors in the calculations, which are due to the isolation of the investment plan.
Step 2
Use a change analysis method. Calculate only the increments that are introduced by the project into the activities of the enterprise. The purpose of this approach is to compare the increase in net revenue with the amount of investment required to increase profits. The advantage of this method is the simplicity of preparing the initial data.
Step 3
Evaluate the project using the merge method. The method consists in building a financial plan for the company implementing this investment plan. It includes the forecast of the income statement, cash flows and the firm's balance sheet. In this case, you need to know well the history of the enterprise in order to make such predictions for the future.
Step 4
Apply the overlay method as well. First, consider the project itself, analyze its economic efficiency, financial viability. Then prepare the financial plan of the organization, but without taking into account the investment plan. Then combine the results of the present activity of the project and the enterprise. The results obtained will be able to tell you about the financial solvency of the company, taking into account the investment project.
Step 5
Finally, make an assessment of the investment project by comparison. The essence of the method is to describe first the budget plan of the enterprise that implements the project. Then describe the current production (excluding the project). Based on this, assess the financial soundness of the firm implementing the investment plan. Compare the net income with and without the project. The difference will give an accurate assessment of the investment project.
