Feasibility study

Investment Take a decision

Accept or reject the

New project
New project production
line
 Reason to do a feasibility study

Focus on the project Provide quality

alternatives information for decision
making
 Steps of feasibility studies

Prefeasibility study

Identify the
project
Save effort time Legal form and description
Project site structure and activity
and money
(commercial –
industrial…etc)
 Marketing feasibility
study

Customer Promotion Market size

needs method

In future Competitor
 Financial feasibility study

Determine the total

Project profitable or From where we get the cost for project and
not money profit
 Steps of financial feasibility study

Projected balance Projected income Projected cash

sheet statement flow

Total investment = long term assets + net working capital

Net Income = Revenue – Expense

 Types of cost

Hard cost
Operating cost
Furniture building

Fixed cost Variable cost

Rent , tax, salaries Commission for sale person
 Financial ratios
Liquidity ratios:
•How well can the organization cover current
liabilities and keep running the business
 Profitability ratios :
•Determine the ability of the company to make
profit and evaluate the performance of the
organization
 Activity ratios :
•Work as indicator for the organization activity
for a certain period of time
 Break even point:
•A point at which the revenue is equal expenses
and the net income is zero
P

o fit
pr

Fixed cost
BEP

Revenues