The financial analysis of projects is the financial and technical mathematical analysis, and through which determines the profit or loss which may be incurred by attempting to make an investment or any other movement, where one of its objectives is to results to support decision making regarding investment activities.
Also, in analyzing investment projects determined the opportunity costs incurred by investing the time to get benefits immediately, while sacrificing the potential for future benefits, or if it is possible to deprive the current profit and transferred to future to be based on specified investments.
One of the assessments should be conducted to support decisions regarding the investment of a project, referred to the financial assessment, which is based on the calculation of the financial aspects of the project.
Financial analysis is also used to compare two or more projects and to determine the investment feasibility of a single project.
Its aims include:
* Establish financial reasons and indices derived from the balance sheet.
* Identify the impact fund for the use of monetary resources in the selected project.
* Calculate the profits, losses, or both, estimated that future to current values.
* To determine the financial rate of return to be generated by the project, by calculating and matching revenue with expenses, at current values.
* Establish a set of numerical inequalities that give positive or negative for the investment in question.
Financial Analysis Methods
* Horizontal method, are compared with each other the last two periods, as in the period that is happening is compared against the budget accounting.
* Vertical Method: This refers to the use of financial statements for a period to know their status and results, and
* Historical Method: We analyzed trends either percentages, indices or ratios, can be plotted to better illustrate.