_IMPORTANT NOTICE_
The format or contents of a feasibility study differ from one school to another, but the concepts are usually the same.
Objectives of the Financial Aspect
This section outlines the specific objectives for the financial aspect of a feasibility study.
Objective 1
Provide a detailed list of assumptions for the projected financial statements.
Objective 2
Outline the estimated initial capital requirement or total project cost and state the sources of funds.
Objective 3
Present a comprehensive financial projection and conduct a thorough financial analysis.
Statement of Assumptions
This section details the major financial assumptions that underpin your financial projections.
Financial assumptions usually include the following:
- Initial capital investment.
- Operating year start and end dates (Fiscal or Calendar).
- Operating days per annum.
- Number of units sold annually.
- Annual change in sales.
- Depreciation method of fixed assets.
- Change in operating expenses based on inflation and/or business activities.
- Applicable tax rates.
- Assumed liabilities at the start and the end of the year.
- Owner withdrawals/dividend declaration and issuance.
Initial Capital Requirement
This section highlights all the financial expenditures that your proposed business may incur.
To compute the total project cost or initial capital requirement, you need to break down estimated capital expenditures, assumed operating expenses, and contingency fund for a specific period (e.g., annual, quarterly, monthly).
Example:
Projected Financial Statements
This section usually contains the Income Statement, Cash Flow Statement, and Balance Sheet. These statements are usually the prime indicator of whether your proposed business will be feasible or not.
Projected Income Statement
It shows how much you earn and spend during the year. It will help you determine if your business will be profitable or not.
Sample Projected Income Statement
Projected Cash Flow Statement
It helps you determine where your money comes from and where it goes. It also helps you assess if you have enough money to pay bills and invest, so you don’t run out of cash.
Sample Projected Cash Flow Statement
Projected Balance Sheet
This is a future snapshot of everything your business owns, owes, and what’s left over for you at the end of the year.
Sample Balance Sheet
Financial Analysis
This section usually presents ratio analysis, cost-volume-profit (CVP) analysis, and other financial-related analyses.
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