Governor Olli Rehn: Dialling back monetary restraint
MODULE 1.pptx
1.
2. CAPITAL INVESTMENT
Capital investment is the acquisition of physical
assets by a company for use in furthering its long-
term business goals and objectives. Real estate,
manufacturing plants, and machinery are among
the assets that are purchased as capital
investments.
3. CHALLENGES WITH CAPITAL
EXPENDITURES
•Measurement Problems. The accounting process of identifying, measuring,
and estimating the costs relating to capital expenditures may be quite
complicated.
•Unpredictability. Organizations making large investments in capital assets
hope to generate predictable outcomes. ...
•Temporal Spread.
4. THE FIVE STAGES OF A
CAPITAL BUDGETING
PROCESS
•Identification of Investment Opportunities. ...
•Development and Forecast of Benefits and Costs. ...
•Evaluation of Net Benefits. ...
•Authorization for Progressing and Spending Capital Expenditure. ...
•Control of Capital Projects.
5. PROJECT
A project is a set of tasks that must be completed in order to arrive at
a particular goal or outcome.
A project is defined as a sequence of tasks that must be completed to
attain a certain outcome.
6. PHASES OF PROJECT
1.Project Initiation
2.Project Planning
3.Project Execution
4.Project Monitoring and Controlling
5.Project Closing
7. PROJECT LIFECYCLE
The Project Lifecycle
is the sequence of
phases through
which a project
progresses. It
includes initiation,
planning, execution,
and closure.
8. Project-driven organizations are structured to facilitate the planning
and management of projects. They focus on making changes to the
organization's products and services through the successful
completion of these projects
Project based organizations have achieved the highest degree of
project orientation and the main focus is creating solutions for their
customer needs. Non- project based companies usually focus on one
product and try to market their product to the customer..
10. PROJECT SELECTION PROCESS
Idea generation
Environment appraisal.
Corporate appraisal
Scouting for project ideas.
Preliminary screening.
Project rating index
Sources of positive Net Present Value.
Entrepreneur qualities
11. IDEA GENERATION
1.SWOT Analysis
Operational objectives of a firm may be one or more of the following.
• Cost reduction.
• Productivity improvement.
• Increase in capacity utilization.
• Improvement in contribution margin
12. 2.Fostering a conducive climate
• Knowledge of market, products, and services.
• Knowledge of potential customer choice.
• Emerging trends in demand for particular product.
• Scope for producing substitute product.
• Market survey & research.
• Going through Professional magazines.
• Making visits to trade and exhibitions.
• Government guidelines & policy.
• Ideas given by the experienced person.
• Ideas by own experience.
• SWOT analysis
13. 3Economic Sector
• State of the economy
• Overall rate of growth
• Cyclical fluctuations
• Inflation rate
• Growth rate of primary, secondary and territory sector
• Growth rate of world economy
• Trade surplus and deficits
• Balance of Payment
14. Technological Sector
• Emergence of new technologies
• Access to technical know-how,
foreign as well as indigenous
Socio-demographic Sector
• Population trends
• Age shifts in population
• Income distribution
• Educational profile
• Employment of women
• Attitudes toward consumption and
investment
9
Government Sector
• Industrial policy
• Government programmes and projects
• Tax structure
• EXIM policy
• Financing norms
• Subsidies incentives and concessions
• Monetary policy
15. Competition Sector
• Number of firms in the industry and the market share of the top
few
• Degree of homogeneity and differentiation among the products
• Entry barrier
• Comparison with substitutes in term of quality and price
• Marketing polices and practices
Supplier Sector
• Availability and cost of raw material
• Availability and cost of energy
• Availability and cost of capital
17. •The process almost invariably involves making decision
relating to technology, scale, location, costs and benefits, time
of completion (gestation period), degree of risk and uncertainty,
financial viability, organisation and management, availability of
inputs,know-how, labour etc.
The detailed analysis is set down in what is called a
feasibility report
3.Formulation
4.Project Implementation
5.Project Completion
18. PROJECT APPRAISAL
•Project appraisal is a cost and benefits analysis of different
aspects of proposed project with an objective to adjudge its
viability.
•Project appraisal helps select the best project among available
alternative projects. For appraising a projects its economic,
financial, technical market, managerial and social aspect are
analysed
19. METHOD OF PROJECT APPRAISAL
•Appraisal of a proposed project includes the following analyses :
1 Economic analysis
2 Financial analysis
3 Market analysis
4 Technical analysis
5 Managerial competence
6 Ecological analysis
20. 1.ECONOMIC ANALYSIS :
Under economic analysis the aspects highlighted include
• Requirements for raw material
• Level of capacity utilization
• Anticipated sales
• Anticipated expenses
• Proposed profits
• Estimated demand
21. 2.FINANCIAL ANALYSIS
• Cost of capital
• Means of finance
• Estimates of sales and production
• Cost of production
• Working capital requirement and its financing
• Estimates of working results
• Break-even point
• Projected cash flow
• Projected balance sheet
23. 4.TECHNICAL ANALYSIS
•Availability of Land and site
•Availability of Water Power, transport, communication
facilities.
•Availability of servicing facilities like machine shop, electric
repair shop etc.
•Coping with anti pollution law
•Availability of work force
•Availability of required raw material as per quantity and
quality
