This document outlines the key components and steps of conducting a feasibility study, including: 1) Analyzing market demand, competition, product details, production costs, and profitability. 2) Preparing technical, financial, and market studies to gather and analyze relevant data. 3) The financial study examines financing needs, costs, income statements, balance sheets, and cash flows. 4) Financial analysis determines ratios, break-even points, free cash flow, net present value, internal rate of return, and sensitivity to recommend the most viable projects.

1. Feasibility Studies
Preparation & Analysis
Basel Abu-Ali

2. What/Why
• Idea!
• Product / Service / Project
• New / Running / Expansion
• Return / Risk
• Different Aspects
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3. Questions
• Is there a demand for the product (market)?
• What about the competition?
• What are the product components?
• How about production costs?
• What is the project / product profitability?
• …
3

4. Preparation
Gather: information
Analyze: data
Decide: results
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5. Structure
Technical
Study
Financial
Study
Market
Study
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Analysis Results

6. Market Study
• Product & Price (4Ps)
• Market size and value
• Market share and competition
• Economic factors
• SWOT Analysis
Projected Sales
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Projected
Sales
Share &
Competition
Product &
Price
Market
Size & Value
Economic
factor
SWOT
Analysis

7. Technical Study
• Production Planning
• Production Mix
• Production Formula
• Operating Expenses (OPEX)
• Capital Expenditures (CAPEX)
• Depreciation
• Staffing
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8. Financial Study
• Financing (Capital required)
• Cost of Capital (WACC)
• Statement of Income (P&L)
• Statement of Financial Position (Balance Sheet)
• Statement of Cash Flows
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9. Financial Analysis
• Financial Ratios (ROA, ROE, etc.)
• BEP & Cost Analysis
• Free Cash Flow (FCF)
• Results Analysis
• Projects Ranking
• Sensitivity & Scenario Analysis
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10. Free Cash Flow (FCF)
• Pre-operating (start-up) expenses
• Revenue
• CGS/COS EBITDA
• OPEX (cash)
• Change in Working Capital (A/R, Inv., A/P) NPV & IRR
• Capital expenditures
• Terminal (residual) Value
• Discount rate (WACC)
• 5+ years projections
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11. Results Analysis
• IRR (%)
• NPV ($)
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WACC
WACC>IRR
<IRR DO NOT
TAKE IT
ZERO
ZERO>NPV
<NPV DO NOT
TAKE IT

12. Projects Ranking
• The general rule:
Take the project with the highest NPV
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13. Sensitivity & Scenario Analysis
• Sensitivity “What if” Analysis
• Scenario Analysis “The good, the bad, the ugly”
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14. Other issues..
• EVA, PBP, …etc.
• Consider overall corporate goals and objectives
• Business plan = document results + strategic management
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15. Summary
Market
Sales Production
OPEX &
CAPEX
Capital
Financials Analysis
FCF Results
Decision
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16. Thank you …
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