Determining the effectiveness of the project is necessary for an enterprise that is developing an investment strategy and wants to assess its own financial solvency. This will help him choose the most effective ways to manage the project.
Instructions
Step 1
Use a conditional highlighting technique. Most of all it is used when the project is physically separate from the organization and can be considered as independent. In turn, the project, which becomes a certain part of the company, is conventionally presented in the form of a separate legal entity with its own liabilities and assets, revenue and costs. Using this method, you can assess the effectiveness of a business project and the importance of its financial solvency. At the same time, one question remains open - about the financial condition of the company, which is being implemented by the project itself.
Step 2
Apply a change analysis method. In this case, an analysis of the increment (change) indicators is carried out. They should be included in the project data reflecting the activities of the enterprise. The technique becomes especially convenient if the essence of the project is the expansion or modernization of the current production. At the same time, the goal of the project may be to increase revenue from improving product quality or increasing its volume and to reduce operating costs. The main task of this method is to compare the growth in the organization's net income with the investments that are required to ensure this growth.
Step 3
Use a pooling method that is based on an analysis of the financial soundness of the project company. This technique is most used when the project is comparable in scale to the scale of the existing production. With the help of this analysis, you can develop a financial plan for the enterprise.
Step 4
You can use the overlay method. First, consider the project using the conditional highlighting method, that is, separately. Analyze the financial viability of the investment project, and then conduct a cost-benefit assessment. After that, develop a financial plan for the company itself without the project, then, in terms of the degree of financial reporting, try to compare the results of the company's current activities with the results of the project.
