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Prof.Shivashankar S.G
Technical analysis
Financial analysis Economic Analysis Ecological Analysis
Market Analysis
Aggregate demand in future Market share? For the above 2 questions we require Consumption trend past/present Production possibilities and constraints Imports and exports Cost structure Elasticity of demand Consumer behavior, intentions, attitudes, preferences and requirements Distribution channels and marketing policies in use Administrative , technical and legal constraints
Technical Analysis
Preliminary tests and studies and provided for?
Financial Analys
Investment outlay and cost of project
Means of financing
Cost of Capital Projected profitability Break-even point Cash flows of project Investment worthwhileness Projected financial position Level of risk
Economic analysis
Direct economic benefit and costs ?
Ecological Analysis
Damage caused by project to environemnt?
Market Analysis
Market Share Technical Viability Technical Analysis Sensible Choices
Financial Analysis
Return Benefits and cost in shadow price Other Impacts
Economic Analysis
Key Issues
Major investment decisions:
Risks DCF Value Financing Impact on Short term EPS Options : DCF do not capture the value of the project and does not reflect the value options embedded. option to delay Option to expand Change inputs or outputs Option to contract or abandon
investment decisions. Investment decisions are often impaired due to deficiencies in capital budgeting. Common weaknesses are :
Poor alignment between Strategy and Capital budgeting Deficiency in Analytical Technique Base case poorly identified Risk is treated inadequately Options not properly evaluated Lack of uniformity in assumptions Side effects ignored