What is included in a financial feasibility study?

1. Pro Forma Financial Statements (10-Year Projection)

These are forward-looking financial statements projecting income, expenses, and cash flows over a 10-year period. They help in forecasting the project's financial performance and assessing its long-term viability. ​

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2. Discounted Cash Flow (DCF) Analysis

DCF analysis estimates the present value of expected future cash flows, helping determine the project's value and investment potential. It accounts for the time value of money, providing insights into profitability. ​

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3. Structure of Assets and Liabilities

This examines the composition and balance between a company's assets and liabilities, offering insights into financial stability and risk exposure. ​

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4. Net Assets (Net Worth)

Net assets, or net worth, represent the difference between total assets and total liabilities. It's a key indicator of financial health, showing what the company owns outright. ​

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5. Financial Sustainability Analysis

This analysis evaluates whether the project can maintain financial operations over time, considering income stability, cost control, and adaptability to economic changes. ​

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6. Key Ratios of Financial Sustainability

Key financial ratios—such as liquidity, profitability, and solvency ratios—are calculated to assess the company's financial performance and sustainability. ​

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7. Working Capital Analysis

This assesses the company's short-term financial health by analyzing current assets and liabilities to ensure it can meet operational needs and obligations. ​

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8. Liquidity Analysis

Liquidity analysis evaluates the company's ability to meet short-term obligations, using ratios like the current ratio and quick ratio to measure financial flexibility. ​

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9. Overview of Financial Results

This provides a summary of financial performance, including revenues, expenses, and net income, offering a snapshot of profitability and operational efficiency.​

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10. Profitability Ratios

These ratios, such as gross profit margin and return on equity, measure the company's ability to generate profit relative to sales, assets, or equity. 

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11. Analysis of Business Activity (Turnover Ratios)

Turnover ratios assess how efficiently a company uses its assets, including inventory turnover and accounts receivable turnover, indicating operational effectiveness. ​

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12. Labor Productivity

This measures output per labor unit, evaluating workforce efficiency and its impact on overall productivity and profitability.​

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13. Key Ratios Summary

A consolidated view of all key financial ratios, providing a comprehensive assessment of financial health and performance.​

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14. Rating of Financial Position and Performance

This involves assigning a qualitative or quantitative rating to the company's financial status, considering various financial metrics and benchmarks.​

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15. Bankruptcy Test

A stress test to evaluate the company's ability to withstand financial distress, assessing the risk of insolvency under adverse conditions.​

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16. Calculation of Final Rating of Financial Condition

An aggregate assessment combining all financial analyses to provide an overall rating of the company's financial condition, guiding investment and operational decisions.​

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Each of these components plays a vital role in understanding and mitigating financial risks, ensuring informed decision-making for the project's success.