The financial economic analysis is a way through which a variety of production processes of the company are assessed. This is done in order to gauge profitability of the process. The objective is to consider money and time for the project concerned. The analysis is aimed to find different economically viable solutions to financial problems and functions. It is necessary to ensure that there is least number of risks involved.
It is important to consider the budget for the project or process so that the company does not lead into any kind of loss. The analysis is done for every organization and the amount of profit which is generated is calculated against the cost of production. There are various back up strategies that are devised through the analysis in case there is any kind of emergency. It becomes necessary to see and ensure that the production takes place in an economically sound way.
Sample Financial Economic Analysis
The Selling and Buying Company has hired: County Sheriff Analysts
Main Objective: For the purpose of providing a financial analysis of the costs and revenues for:
Project: Use of solar energy for the Production of Car headlights
Project Summary: To create a solar energy operated headlight which will be beneficial for the environment and also comparatively cheaper than a normal headlight. The functions will be similar to a general headlight. Solar panels will be inserted.
Details of Production:
- Budget Assigned: $39811728
- Asset (working capital): $924728
- Equipment cost in production $2.3 million
- Loan from bank: $3 million
- Solar Panel (Total): $4.6 million
Expected time period of production: Up to one year from production
Revenue generation against Cost of production:
- Expected revenue is over $34 million
- Production cost total is $20 million
- Verdict: Economically stable production