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Transcript of Financial Evauation
How much is needed?
When is required?
Rr - Real Performance - Expected ratio
Rn - Nominal Performance (INPC/SAR)
Ri - Inflation Ratio - Risk ratio
Income - Expenses
Capital / Fixed Assets
Net Income / Liabilities
Difference between the expected / planned performance and calculated performance.
Identify, quantify and evaluate project impacts on its environment and its possible impacts.
An impact is a major environment alteration by human actions, its repercussion will vary according with the surroundings vulnerability.
Production volume required to meet sales forecast
End of period
Materials needed to meet production budget
Bill of Materials
Human resources required to produce the product
# of Shifts
Indirect Costs Budget
Costs involved in production but that are not raw materials or direct labor
Costs & Price Formulas
Unit Cost = Fixed Costs + Variable Costs
Fixed Costs = Raw Materials + Direct Labor
Variable Costs = Indirect Labor + Others Costs
Price = Unit Cost + Profit
Profit = Price - Unit Cost
NPW - Net Present Worth
Cost / Benefit Ratio
IIR - Internal Interest Rate
ROI - Return of Investment
Meet with experts - consider it only for very specific evaluations
Develop a check list - allows to rapidly identify impacts
Cause - effect matrix
Flow diagrams - shows impact relationships
Sustainability Evaluation Methods
Return of Investment (ROI)
Annual Net Profit after taxes (earnings)
Total Capital Investment
Net Present Worth (NPW)
NPW = Present worth of all cash inflow - Present worth of all Investment items
NPW > 0
Project makes more money than the interest rate
Cost - Benefit Ratio (CB)
Total Net Income (during project period)
Total Capital Investment
CB > 1
Project is profitable
Interest Rate of Return (IRR)
Iterative process to achieve a NPW=0
Commercial software can resolve it
IRR is compared to the interest of other investments portfolios to evaluate benefit