Economic and financial analysis in 5 steps

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Economic and financial analysis is a versatile tool that allows estimating the profitability of investments. It can be used to assess the viability and profitability of a business project of any manufacturing philippines phone directory search entity. For the sake of simplicity, it can be considered a group of companies engaged in the manufacture of physical products, but the analytical model (including all the stages that compose it) is a universal tool.

To begin the analysis, it is necessary to precisely define the objective of the project in question, in this case to characterize the product to be manufactured. It is also necessary to provide, at all stages of the study, the financial and economic data, such as, for example, the cost and revenue structure or the values ​​of market indicators, necessary to obtain reliable results.

Stage 1: Analysis of the legal situation

The start of a proper economic and financial analysis must be preceded by an analysis of the applicable legal acts. The verification must include documents that have an impact on the sector in which the planned investment is to be made. The main focus should be on verifying the existence of product-specific restrictions and prohibitions on the production, distribution or sale of the product in a given market.

Stage 2: Assessing the state of the business



The second step of the analysis is to assess the state of the business entity, especially from a financial point of view. It allows to check whether the company can afford to carry out the planned project at a given time.

The feasibility of the project should also be checked at this stage. This is mainly based on financial capacity, but additional elements should also be taken into account, depending on the nature of the production of the new product and its impact on the entity's existing activities, for example, production and staff capacity.