PROJECT VALUATION
Plan your projects and define important tasks and actions
1. PROJECT
1.1. Set of coordinated activities which are related to each other and work for a specific purpose. It’s an idea, and its decision of execution will be based on valuation techniques.
2. Method of valuation
2.1. Set of tools / techniques that allow whether a project is acceptable or not.
3. Economic engineering
3.1. Set of financial and industrial tools for decision making.
4. Data Retrieval & External Forces
4.1. EXTERNAL FORCES
4.1.1. 7 P’s of Marketing
4.1.1.1. PRODUCT
4.1.1.2. PLACE
4.1.1.3. PRICE
4.1.1.4. PROMOTION
4.1.1.5. PEOPLE
4.1.1.6. PROCESS
4.1.1.7. PHYSICAL ENVIRONMENT
5. QUANTITATIVE ANALYSIS
5.1. Net present value
5.1.1. A present value of future cash flows so we can evaluate if its better than the initial investment.
5.1.2. The NPV uses s a discount rate like inflation, sector rate of return, loan interest rate etc.
5.1.3. If the NPV is BIGGER, then it should be accepted, if not it should be rejected
5.2. Internal Rate of Return
5.2.1. With the IRR we can get the breakeven discount rate of any project. It is related with the NPV. If the IRR is lower than the discount rate, the project should not be considered.
5.3. Modified Internal Rate of Return
5.3.1. It assumes different rates for the cash flows
5.4. Return on investment
5.4.1. It evaluates the % of the return provided by future discounted cash flows.
5.5. CAGR
5.5.1. It presents the annual percentage return on a long term investment.
5.6. Return period
5.6.1. It indicates when the project will start to generate returns.
5.7. Discounted Return period
6. Liabilities / Assets
7. MAIN ACCUNTS TO WATCH:
7.1. ASSETS
7.2. LIABILITIES AND EQUITY
7.3. P&L
7.4. HORIZONTAL & VERTICAL ANALISIS
7.4.1. HORIZONTAL ANALISIS
7.4.1.1. changes from one year to another
7.4.2. VERTICAL ANALISIS
7.4.2.1. Do the present structure generates opportunities on the upcoming years?
8. BASIC QUESTIONS
8.1. INDUSTRY
8.2. OBJETIVE
8.2.1. VOLUME
8.2.2. MARGIN
8.3. TIME ISSUES
8.3.1. YTD, YTGO, 4QRB...
9. KPI´S
9.1. Tangible equity
9.2. Liabilities / Equity
9.3. EBITDA / Interests
9.4. EBITDA / Interests + CPLTD
9.5. Quick ratio
9.6. Acid test
9.6.1. (Current Assets – Inventories) / Short term liabilities
9.7. Working capital turnover
9.7.1. Sales / Working capital
10. VALUE CREATION
10.1. SOLVENCY
10.2. LIQUIDITY
10.3. PROFITABILITY
11. DEPENDENCY
11.1. Mutually exclusive
11.1.1. Between 2 projects, just one project can be executed and the other must discarded.
11.2. Independent
11.2.1. The execution of a certain project won’t affect the feasibility of another project.
11.3. Interdependent
11.3.1. Complementary: Several projects arise from the selection of a given project
11.3.2. Competitive: A set of projects are proposed while only the best must be selected.
12. PROFILE
12.1. Private
12.1.1. It’s execution will be determined based on the role on the enterprise
12.1.2. New business units
12.1.2.1. creation of a new product or service
12.1.3. Changes in the business units
12.1.3.1. only changes into the means of production.