Economic and financial analysis is a versatile tool that allows estimating the profitability of investments. It can be used to assess the viability and profitability of a business project of any manufacturing entity. For the sake of simplicity, it can be considered a group of companies engaged in the manufacture of physical products, but the analytical model (including all the stages that compose it) is a universal tool.
To begin the analysis, it is necessary to precisely define the objective of the project in question, in this case to characterize the product to be manufactured. It is also necessary to provide, at all stages of the study, the financial and economic data, such as, for example, the cost and revenue structure or the values of market indicators, necessary to obtain reliable results.
Stage 1: Analysis of the legal situation
The start of a proper economic and financial analysis must be preceded by an analysis of the applicable legal acts. The verification must include documents that have an impact on the sector in which the planned investment is to be made. The main focus should be on verifying the existence of product-specific
restrictions and prohibitions on the production, distribution or sale of the product in a given market.
Stage 2: Assessing the state of the business
The second step of the analysis is to assess the state of the business entity,
especially from a financial point of view. It allows to check whether the company can afford to carry out the planned project at a given time.
The feasibility of the project should also be checked at this stage. This is mai
nly based on financial capacity, but additional elements should also be taken phone number list into account, depending on the nature of the production of the new product and its impact on the entity’s existing activities, for example, production and staff capacity.
Stage 3: Analysis of investment potential
The analysis of potential consists of an examination of the size of the economic zone in which the investment is planned, an assessment of the competition and the identification of barriers in the market.
Once the market and competition analysis has been carried out, the potential of a How do you manage multiple projects simultaneously? given industry to carry out production or sales activities in it can be preliminarily estimated.
Step 4: Return on investment analysis
The next stage is an analysis of the costs and revenues associated exclusively with the production, distribution or qatar data sale of the product selected at the beginning. This part, which is the financial analysis, also takes into account the changes in capital i
n the other activities resulting from the expansion or change of the product portfolio. It is important to identify all groups of costs and revenues. This is because it allows a reliable forecast of the financial result of the planned investment.
The fourth stage allows for a final assessment of the profitability of a given company. It also shows the distribution of profitability scores over successive years
, allowing for the selection of the year in which a given type of company should be launched.
Step 5 Making decisions about the application
Like other types of analysis, economic-financial analysis must also end with a conclusion and, ultimately,
with a decision to start or stop producing, selling or distributing the new product.