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    35 - Business Plan Appraisal

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    Saddiq Swaleh
    PROJECT APPRAISAL It is an assessment of a project in terms of its viability and feasibility. It is an y project p j analysis of cost and benefit over the project life.

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    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    35 - Business Plan Appraisal

    Uploaded by

    Saddiq Swaleh
    31 views10 pages
    PROJECT APPRAISAL It is an assessment of a project in terms of its viability and feasibility. It is an y project p j analysis of cost and benefit over the project life.

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    35_business plan appraisal

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    PROJECT APPRAISAL It is an assessment of a project in terms of its viability and feasibility. It is an y project p j analysis of cost and benefit over the project life.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    31 views10 pages

    35 - Business Plan Appraisal

    Uploaded by

    Saddiq Swaleh
    PROJECT APPRAISAL It is an assessment of a project in terms of its viability and feasibility. It is an y project p j analysis of cost and benefit over the project life.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 10

    PROJECT APPRAISAL

    It is an assessment of a project in terms of its viability and feasibility. It is an


    y of cost and benefit of a p
    analysis project
    j over the project
    p j life.

    1. ECONOMIC APPRAISAL
    2. FINANCIAL APPRAISAL
    3
    3. TECHNICAL APPRAISAL
    4. MARKET APPRAISAL
    5. MANAGERIAL APPRAISAL
    6. ENVIRONMENTAL APPRAISAL
    PROJECT APPRAISAL

    ECONOMIC APPRAISAL

    i. PAYBACK PERIOD
    ii. AVERAGE RATE OF RETURN ON INVESTMENT
    iii. NET PRESENT VALUE
    iv. INTERNAL RATE OF RETURN
    v. BENEFIT-COST RATIO
    vi. LEVEL OF CAPACITY UTILISATION OR BREAKEVEN ANALYSIS
    PROJECT APPRAISAL
    FINANCIAL APPRAISAL
    i. REQUIRED FINANCIAL RESOURCES
    a. FIXED ASSETS
    b. CURRENT ASSETS
    c. NECESSARY WORKING CAPITAL

    ii. AVAILABILITY OF FINANCIAL RESOURCES


    a.
    a REQUIRED BORROWING
    b. POTENTIAL SOURCES OF FUNDS
    c. COST OF BORROWING
    d
    d. REPAYMENT CONDITIONS
    e. OPERATION COST ANALYSIS
    f. FIXED COSTS
    g
    g. VARIABLE COSTS
    h. PROJECT CASH FLOW
    i. PROJECT PROFITABILITY
    PROJECT APPRAISAL
    TECHNICAL APPRAISAL
    i. CRUCIAL TECHNICAL SPECIFICATIONS
    a. DESIGN
    b. DURABILITY
    c
    c. RELIABILITY
    d. PRODUCT SAFETY
    e. STANDARDIZATION

    ii. ENGINEERING REQUIREMENTS


    a. MACHINES
    b
    b. TOOLS
    c. TECHNOLOGY
    d. WORK FLOW

    Cont…
    PROJECT APPRAISAL
    TECHNICAL APPRAISAL …Contd.

    iii. PRODUCT DEVELOPMENT


    a. BLUEPRINTS
    b. MODELS
    c
    c. PROTOTYPES

    iv. PLANT LOCATION


    a. LAND AND SITE AVAILABILITY
    b. PROXIMITY TO MARKET
    c. PROXIMITY TO SOURCE OF RAW MATERIAL
    d. AVAILABILITY OF SUPPORT SERVICES
    e. SCOPE FOR EXPANSION
    f. GOVERNMENT RESTRICTIONS/INCENTIVES
    g
    g. INFRASTRUCTURE
    h. ACCESSIBILITY
    i. AVAILABILITY OF WORKFORCE
    PROJECT APPRAISAL
    MARKET APPRAISAL
    i. MARKET POTENTIAL
    ii. UNDERSTANDING OF CUSTOMERS
    iii. DIFFERENTIATION
    iv. MARKET SEGMENTATION
    v. POTENTIAL DEMAND
    vi
    vi. DEMAND-SUPPLY GAP
    vii. MARKET TEST REPORT
    viii. SALES PRICE PROJECTIONS
    ix. PROPOSED CHANNELS OF DISTRIBUTION
    x. PRODUCT PROMOTION STRATEGY
    xi. PRODUCT LIFECYCLE ANALYSIS
    xii. COMPETITION AND COMPETITOR’S ANALYSIS
    PROJECT APPRAISAL
    MANAGERIAL APPRAISAL
    i. PERSONAL BACKGROUND OF THE PROMOTERS
    ii. THEIR EXPERIENCE, SKILL AND KNOWLEDGE BASE
    iii. FINANCIAL LEVERAGE WITH THEM
    iv. CREDITWORTHINESS OF THE PROMOTERS
    v. ORGANISATIONAL SETUP AND RESPONSIBILITIES AT VARIOUS LEVELS
    vi
    vi. AVAILABILITY OF MANAGERIAL RESOURCES

    ENVIRONMENTAL APPRAISAL
    i. ENVIRONMENTAL RISK
    ii
    ii. POLLUTION CONTROL PLAN
    iii. COMPLIANCE WITH GOVERNMENT REGULATIONS
    MAJOR FINANCIAL RATIOS USED IN PROJECT APPRAISAL

    1. DEBT- EQUITY RATIO (1:3)


    = TOTAL DEBTS / [OWNER’S CAPITAL + SUBSIDY]*100

    = TOTAL DEBTS/EQUITY + RESERVES (IN THE CASE OF A LTD. CO.)

    2. CURRENT RATIO (2 BUT NOT > 1.33)


    = CURRENT ASSETS / CURRENT LIABILITIES

    3. DEBT SERVICE COVERAGE RATIO ((2 OR MORE BUT NOT > 1.5))
    = [NET PROFIT AFTER TAX + DEPRECIATION + INTEREST ON TERM BORROWINGS]
    / ANNUAL REPAYMENT + INTEREST ON BORROWINGS]

    Cont…
    MAJOR FINANCIAL RATIOS USED IN PROJECT APPRAISAL …Contd
    4. RETURNS ON INVESTMENT (HIGHER THAN THE HIGHEST RATE OF INTEREST)

    = NET PROFIT BEFORE INTEREST AND TAX / INVESTMENT

    5
    5. RETURN ON EQUITY (HIGHER THAN THE OTHER INVESTMENTS)
    = NET PROFIT AFTER TAX / OWNER’S CAPITAL

    6. NET PROFITABILITY RATIO ( > OR = TO INDUSTRY AVERAGE)


    = NET PROFIT / SALES*100

    7. OPERATING RATIO
    = COST OF GOODS SOLD + OPERATING EXPENSES / NET SALES * 100
    Thank
    h k you

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