Monthly Model with 5 Year Projections (NPV and IRR Analysis)

Project Feasibility Study

Fin-Wiser is a specialist Advisory boutique focused on providing Financial Modeling, Financial Analysis, Business Transformation & Business Research Services.

Geography: APAC ; Industry: Operations and Maintenance

Prepared by: Fin-Wiser Team

website:- www.fin-wiser.com

Email : contact@fin-wiser.com

Content

Problem Statement

Proposed Solution

Model Output:- Cash Flow Analysis One Pager Summary

Model Structure:- Assumption Sheet Financial Statement – IS & BS Financial Statement – Cash Flows (Direct & Indirect) Staff Cost Subcontracted Cost Operational Expenses Capital expenditure & Depreciation Working Capital Calculation Check Sheet

Problem Statement

Problem Statement:-

• Build an excel based monthly financial model with 5 year projections for submission of a government tender in APAC.

• Create outputs as per the Tender/RFP requirement

• Calculate and interpret NPV and IRR for project feasibility

• Perform Cash Flow Analysis

Model Type: Monthly Model with 5 Year Projections

Industry: Operations and Maintenance

Country: APAC

Purpose: Government Tender/Bid Submission

Methodology Used: NPV & IRR Analysis

Usability For: Project Feasibility Analysis

Proposed Solution

Proposed Solution:-

• Create a Sophisticated monthly financial model with detailed cost calculations as per the RFP requirements along with clearly defined input and output cells.

• Create Integrated Financial Statements (IS, BS and CF) on monthly and annual basis

• Create flexibility around various cost input to accommodate multiple scenarios in the model

• Create outputs around Margin Profile and Free Cash Flow Analysis

• Benchmark findings with the exiting portfolio of similar project

Model Type: Monthly Model with 5 Year Projections

Industry: Operations and Maintenance

Country: APAC

Purpose: Government Tender/Bid Submission

Methodology Used: NPV & IRR Analysis

Usability For: Service Providers, Project Analysis

Model Output: Cash Flow Analysis

Approach

• Calculate and graphically present the Cash inflows and outflows.

• Present total cost base breakup

• Create chart around Net cash flows to present cash requirement based on timeline

User Advantage

• Understand and interpreted cash flow viability based on the graphs and quickly identify cost areas which dominate the cash requirement.

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Model Output: One Pager Summary

Model Structure: Assumptions Sheet

Approach

• Major assumptions are documented and organized by categories (such as Staff Cost, Subcontractor cost, Operational expenses, Capital expenditure and depreciation) to cover 10 scenarios.

• Most of the assumptions are color-coded and placed on a single sheet so that you don't have to hunt throughout the model.

• We work with you to identify and quantify the assumptions and values that are most meaningful for your type of business.

User Advantage

• User can easily identify the assumption placeholders and make necessary changes

• Reduce chances of errors in model

Model Structure: Financial Statements IS & BS

All standard financial statements, including the income statement (Profit & Loss) and balance sheet on monthly and annual basis.

Model Structure: Cash Flows

We create two independently derived cash flow schedules (the standard GAAP Statement of Cash Flows, and Cash Sources & Uses which makes it easier to understand and comprehend from different perspectives. Also, this helps to verify model’s integrity as both the cash flows are individually derived.

Model Structure: Staff Cost

Approach

• Staff cost is calculated by each role and by each salary component

• Both, ongoing salary cost and one time recruitment expenses are factored in

• Manpower phasing is done as per the hiring plan which is then used to calculate monthly staff cost

• Indexation/Inflation is assumed on each salary component separately

User Advantage

• This approach provides user with the flexibility to assess impact of each role and salary component on total staff cost.

Model Structure: Subcontractor Cost

Approach

• Create separate sheet for all the cost related to subcontracted services

• Provides details on the type of service, start date and end date for service require

• Indexation/Inflation is assumed on each subcontracted cost separately.

User Advantage

• This approach provides user with the flexibility to assess impact of subcontracted service on the total cost.

Model Structure: Operational Expenses

Approach

• Create separate input for all the Operational expenditure expected during the contract term.

• Total Operational expenditure per item is calculated as number of units X price per unit.

• Each Operational expenditure has a separate start and end date to provide user with the flexibility to control cash outflow.

• Make inflation/indexation adjustment on each Operational expenditure cost by distributing them to a specific cost basket.

User Advantage

• This approach provides user with the flexibility to consider separate assumptions around each cost item to control cash flows.

Model Structure: Capital expenditure & Depreciation

Approach

• Create separate input for all the Capital expenditure expected during the contract term.

• Each Capital expenditure has a separate start and end date to provide user with the flexibility to control cash outflow.

• Calculate depreciation for each asset based on the asset life.

• Provide user with the option to choose from straight line (SLM) or written down (WDV) type of depreciation.

User Advantage

• This approach provides user with the flexibility to consider separate assumptions around Capital expenditure and D&A both of which are crucial in NPV Analysis.

Model Structure: Working Capital Calculations

Approach

• Working Capital is calculated as Inflows Less outflows.

• Create separate accounts for receivables and payables.

• Cerate different assumptions around receivable and payable months for each revenue and cost component.

• Calculate short term funding requirement and repayment based on working capital requirement.

User Advantage

• This approach provides user with the flexibility to consider separate assumptions around each working capital component which is crucial part of NPV Analysis.

Model Structure: Check Sheet

Approach

• All the checks by categories such as Staff Cost, Balance Sheet, Revenue, Operational expenditure, & capital expenditures & Depreciation are organized on a single sheet

• Create Master Check and link every sheet with it so that if there is an error in the model, Blue strip at the top turns red

User Advantage

• User can easily identify the assumption because of which there is an error in the model.

• User need not to visit check sheet every time they make a change in the model as the color coding at the top will indicate error irrespective of the sheet user is working on.

Financial Modeling and Valuation

Fin-Wiser is a specialist Advisory boutique focused on providing Financial Modeling, Financial Analysis, Business Transformation & Business Research Services.

Business Modeling

Financial Analysis

Financial Tools

Model Review and Stress Testing

Dashboard & MIS

website:- www.fin-wiser.com

Email : contact@fin-wiser.com

Thank You!

Disclaimer:

The presentation presents a hypothetical situation/financial matrix/numbers. Any similarity between the situation/financial matrix/numbers with any company or individual is purely coincidental.