Review

Questions
ChapLer 21 36
ulaz Cherry amela ?
L v l L W C u L S 1 l C n S


ChapLer 21
1 ulscuss Lhe raLlonale for selecLlng only sound
lnvesLmenL pro[ecLs among developlng
counLrles

1he selecLlon of only sound lnvesLmenL
pro[ecLs has Lo be underLaken so as Lo ensure
Lhe opLlmum uLlllzaLlon of scarce human and
caplLal resources Lowards meeLlng soclal
ob[ecLlves and economlc growLh

2 ln Lhe prelnvesLmenLs sLages whaL Lypes of
declslons musL be made by Lhe proponenL?

(a) ldenLlflcaLlon
(b) rellmlnary analysls
(c) llnal analysls
(d) ro[ecL evaluaLlon

3 WhaL are Lhe reasons LhaL wlll [usLlfy a pre
feaslblllLy sLudy?

(a) 1he lnvesLmenL opporLunlLy ls so promlslng
LhaL an lnvesLmenL declslon can be Laken on
Lhe basls of Lhe lnformaLlon elaboraLed aL
Lhe prefeaslblllLy sLage

(b) 1he pro[ecL concepL [usLlfles a deLalled
analysls by a feaslblllLy sLudy

(c) Any aspecLs of Lhe pro[ecL are crlLlcal Lo lLs
feaslblllLy and requlre lndepLh
lnvesLlgaLlon

(d) 1he lnformaLlon ls adequaLe Lo declde LhaL
Lhe pro[ecL ls noL elLher a vlable proporLlon
or aLLracLlve enough for a parLlcular
lnvesLor



4 WhaL ls a feaslblllLy sLudy?

A feaslblllLy sLudy ls a means Lo arrlve aL an
lnvesLmenL declslon lL wlll deflne and analyze
Lhe crlLlcal elemenLs LhaL relaLe Lo Lhe
producLlon of a glven producL LogeLher wlLh
alLernaLlve approaches Lo such producLlon




































L v l L W C u L S 1 l C n S


ChapLer 22

1 ueflne pro[ecL feaslblllLy sLudy

A pro[ecL feaslblllLy sLudy ls Lhe sysLemaLlc
lnvesLlgaLlon whlch ascerLalns wheLher a
buslness underLaklng ls vlable and lf so Lhe
degree of lLs proflLablllLy

2 ulscuss Lhe advanLages LhaL a pro[ecL feaslblllLy
sLudy can glve Lo Lhe followlng

(a) rospecLlve credlLor
1)1o ascerLaln wheLher flnanclal asslsLance
should be exLended or noL
2)1o deLermlne Lhe Lerms and condlLlons
should Lhe loan be glven

(b) rospecLlve lnvesLor
1)1o ascerLaln Lhe vlablllLy of new pro[ecLs
2)1o choose from among Lhe alLernaLlve
pro[ecLs Lo be pushed Lhrough

(c) CurrenL sLockholder
1)1o evaluaLe lf an lnvesLmenL on a pro[ecL
should be made or noL
2)1o declde Lo sell an exlsLlng company

(d) ManagemenL
1)1o deLermlne feaslblllLy of expanslon
programs
2)1o deLermlne a reasonable prlce of an
exlsLlng buslness lL ls conslderlng Laklng
over

3 ClLe llmlLaLlons of a pro[ecL feaslblllLy sLudy

1)CerLaln necessary and requlred lnformaLlon
may noL be avallable
2)Lrror ln [udgmenL by Lhe person maklng Lhe
sLudy elLher due Lo hls lncompeLence may
resulL ln formulaLlng wrong concluslons or
recommendaLlons
3)1he sLudy ls baslcally a forecasL

4 WhaL are Lhe general aspecLs covered ln a
pro[ecL feaslblllLy sLudy?

l CrganlzaLlon and managemenL
ll MarkeLlng
lll 1echnlcal
lv 1axaLlon
v llnanclng
vl llnanclal pro[ecLlons
vll roflLablllLy
vlll Soclal deslrablllLy






























L v l L W C u L S 1 l C n S


ChapLer 23

1 WhaL are Lhe sallenL lnformaLlon LhaL should be
presenLed ln Lhe pro[ecL background and
hlsLory" parL of a lS?

a ro[ecL background
1)descrlpLlon of Lhe pro[ecL daLa
2)llsL of ma[or pro[ecL parameLers
3)CuLllned economlc lndusLrlal flnanclal
soclal and oLher relaLed pollcles
4)Ceographlcal levels
3)Lconomlc hlghllghL
b ro[ecL hlsLory
1)PlsLorlcal developmenL of Lhe pro[ecL
2)SLudles and lnvesLlgaLlons already
performed
3)Concluslons arrlved aL and declslons
Laken

2 WhaL are Lhe ma[or areas covered ln Lhe markeL
analysls secLlon of a lS?

a uemand and markeL sLudy
b Sales forecasL and markeLlng of producLs
and byproducLs

3 WhaL precauLlons should an analysL Lake ln
maklng sLaLlsLlcal analysls?
(a) 1he selecLlon of sLaLlsLlcal Lechnlques for
esLlmaLlon analysls and forecasLlng should
be approprlaLe Lo Lhe naLure of Lhe
producL markeL and daLa paLLern
(b) 1he assumpLlons made ln Lhe analysls an
appllcaLlon of daLa
(c) uaLa and coefflclenLs assoclaLed wlLh one
markeL should noL be LransplanLed Lo
oLhers
(d) 1he deflnlLlon of characLerlsLlcs should be
preclse and scrupulously adhered Lo
(e) When ldenLlfylng averages norms
sLandards Lrends and coefflclenLs a falrly
large number of observaLlons amenable Lo
sLaLlsLlcal LesL of slgnlflcance should be
Laken lnLo accounL
(f) AppllcaLlon reference daLa should be used
wlLh Lhe necessary ad[usLmenL
(g) 1he dynamlcs of daLa and coefflclenLs
should be recognlzed
(h) When ldenLlfylng Lrends coefflclenLs and
relaLlonshlps abnormal or exLraordlnary
cases should be ellmlnaLed
(l) Slmple averages should be avolded ln
preference Lo welghLed averages
([) lL ls someLlmes advocaLed LhaL when daLa
are noL avallable Lhe analysL may be
conLenL wlLh a few rough esLlmaLes

4 Lxplaln Lhe ob[ecLlve of senslLlvlLy analysls

1he ob[ecLlve of senslLlvlLy analysls ls Lo
deLermlne Lhe lmpacL on Lhe slze of demand
aggregaLe or by segmenL lf Lhe facLors
lnfluenclng demand Lurn ouL Lo be more or less
favorable LhaL has been assumed

3 WhaL should be consldered ln deLermlnlng prlce
aL whlch Lhe producL should be sold?

roducL prlclng has a slgnlflcanL lmpacL on
Lhe volume of sales and on Lhe lncome from
such sales 1he base of any prlclng should be
Lhe producLlon cosLs and Lhe markeL sLrucLure
for a parLlcular producL








L v l L W C u L S 1 l C n S


ChapLer 24
1 WhaL are Lhe daLa requlred Lo seL up a
producLlon program?

1o plan such a program Lhe varlous
producLlon sLages should be consldered ln
deLall boLh ln Lerms of producLlon acLlvlLles and
Llmlng 1he lnpuL requlremenLs and cosLs have
Lo be assessed for (a) baslc maLerlals such as
raw maLerlals (b) auxlllary maLerlals (c) ma[or
uLlllLles and (d) dlrecL labor requlremenLs

2 WhaL are Lhe facLors LhaL should be consldered
ln preparlng Lhe producLlon program?

4 AnLlclpaLed sales
4 Mlnlmum sLorage requlremenLs
4 LxpecLed wasLage
4 arameLers of planL capaclLy
4 AfLersales requlremenLs
4 eserves due Lo operaLlonal reasons

3 ln deLermlnlng Lhe normal planL capaclLy whaL
daLa wlll be needed?

(a) SelecL and descrlbe ln deLall Lhe feaslble
normal planL capaclLy
(b) SLaLe reasons for selecLlon
(c) uescrlbe nomlnal maxlmum capaclLy
(d) 1he selecLlon of Lhe feaslble normal planL
capaclLy should be based on
4 arameLers of Lhe producLlon
program
4 arameLers of mlnlmum economlc
equlpmenL slze
(e) lanL capaclLy should be deLermlned as
feaslble normal capaclLy for
4 1he enLlre planL
4 1he maln deparLmenLs

4 Why ls lL necessary Lo deLermlne Lhe feaslble
normal planL capaclLy?

lL ls necessary Lo provlde for wasLage
damage or re[ecLlon elemenLs ln preparlng Lhe
maLerlal consumpLlon esLlmaLes

3 WhaL wlll be Lhe basls ln selecLlng Lhe feaslble
normal planL capaclLy?

1he selecLlon of Lhe feaslble normal planL
capaclLy should be based on
4arameLers of Lhe producLlon program
4arameLers of mlnlmum economlc
equlpmenL slze

6 WhaL wlll Lhe pro[ecL englneerlng aspecL cover?

(1) ro[ecL layouLs
(2) Scope of Lhe pro[ecL
(3) 1echnologles
(4) LqulpmenL
(3) Clvll englneerlng works

































L v l L W C u L S 1 l C n S


ChapLer 23

1 WhaL ls Lhe composlLlon of lnlLlal lnvesLmenL
cosLs of a pro[ecL?

a llxed lnvesLmenLs
b reoperaLlng expendlLures
c neL worklng caplLal

2 Why ls Lhe lncluslon of neL worklng caplLal ln
Lhe lnvesLmenL cosLs lmporLanL?

neL worklng caplLal lncluslon ln Lhe
lnvesLmenL cosLs ls lmporLanL because lL
lndlcaLes Lhe flnanclal means requlred Lo
operaLe Lhe pro[ecL accordlng Lo lLs producLlon
program

3 WhaL are lncluded ln Lhe flxed lnvesLmenLs
cosL?

(1) Land and slLe preparaLlon
(2) 8ulldlngs and clvll works
(3) lanL machlnery and equlpmenL lncludlng
auxlllary equlpmenL
(4) lndusLrlal properLy rlghLs

4 WhaL are Lhe ma[or caLegorles of operaLlng
cosLs?

(1) roducLlon cosL

(2) AdmlnlsLraLlve and selllng expenses whlch
should be calculaLed separaLely

(3) uepreclaLlon and amorLlzaLlon whlch are
lncluded under facLory overhead and selllng
and admlnlsLraLlve cosLs

(4) llnanclal cosLs





3 WhaL facLors should be consldered ln
deLermlnlng Lhe personnel requlremenLs of Lhe
proposed venLure?

(1) assessmenL of Lhe supply and demand of
manpower and especlally of labor ln Lhe
area

(2) appralsal of manpower and occupaLlonal
skllls avallable ln vlew of Lhe sklll and
Lechnologlcal requlremenL of Lhe pro[ecL
(3) labor laws requlremenLs

(4) number of annual worklng days ofLen only
200230 worklng days are acLually avallable
per year because of losses due Lo Sundays
naLlonal holldays naLural calamlLles and Lhe
llke


















L v l L W C u L S 1 l C n S


ChapLer 26
1 WhaL are Lhe baslc flnanclal sLaLemenLs LhaL
should be pro[ecLed?

(1) ro[ecLed sLaLemenL of comprehenslve
lncome
(2) ro[ecLed sLaLemenL of flnanclal poslLlon
(3) ro[ecLed cash flow sLaLemenL

2 WhaL are Lhe reasons for preparlng Lhe

(1) ro[ecLed sLaLemenL of comprehenslve
lncome
(2) ro[ecLed sLaLemenL of flnanclal poslLlon
(3) ro[ecLed cash flow sLaLemenL

1he maln reason for preparlng Lhe above
menLloned ls Lo evaluaLe Lhe economlc vlablllLy
of Lhe pro[ecL and lLs flnanclal requlremenLs

3 WhaL are Lhe posslble sources of flnanclng LhaL
may be avalled of Lo flnance proposed pro[ecLs?

4 LqulLy
4 Loan flnanclng
4 ShorLLerm loans
4 LongLerm loans

4 ln whaL forms may Lhe flnanclal asslsLance from
Lhe sources enumeraLed ln no3 be obLalned?

4 LqulLy ordlnary equlLy and
preference share caplLal

4 Loan flnanclng (a) shorL and medlum
Lerm borrowlngs (b) longLerm
borrowlngs from flnanclal developmenL
lnsLlLuLlons

4 ShorLLerm loans lnvenLorles are
belng flnanced

4 LongLerm loans are avalled wlLh
cerLaln regulaLlons such as resLrlcLlons
on Lhe converLlblllLy of shares lssues of
bonds and debenLures

3 WhaL ls Lhe naLure of Lhe sLaLemenL of
assumpLlons" ln a flnanclal sLudy?
6 WhaL are some assumpLlons LhaL are usually
made ln a flnanclal sLudy?


























L v l L W C u L S 1 l C n S
























ChapLer 33
1 uescrlbe whaL ls meanL by an operaLlonal audlL
2 Lxplaln Lhe dlfferences ln Lhe Lerms operaLlonal
performance and managemenL audlLs
3 ldenLlfy 3 ma[or dlfferences beLween flnanclal
and operaLlonal audlLlng
4 Lxplaln Lhe role of Lhe governmenL audlLors ln
operaLlonal audlLlng Pow ls Lhls slmllar Lo and
dlfferenL from Lhe role of lnLernal audlLors?
3 ldenLlfy Lhe 3 phases of an operaLlonal audlL
6 Lxplaln how plannlng for operaLlonal audlLlng ls
slmllar Lo and dlfferenL from flnanclal audlLlng
7 WhaL are Lhe ma[or dlfferences beLween
reporLlng for operaLlonal and flnanclal audlLlng?


























L v l L W C u L S 1 l C n S
























ChapLer 36