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Financial Considerations - Coggle Diagram

- - - - The products
        Provide a clear and simple description of your products and services - a description that anyone should understand. Don't assume that the reader will have technical knowledge of what you are talking about - if you need to post technical information, explain it in very clear and simple terms. After Explain:
        
        What consumer need are you satisfying with these products / services, that is not being satisfied at the moment?
        
        Other unique factors of your product / service.
        
        What is the sale price and the pricing strategy that formulated it? You have to show that your potential customers can afford these prices and that they will be willing to pay them.
        
        The market
        
        Market Size - shows the size of the market and is specific about the sector within your Market that you plan to attack.
        
        Market Growth - use studies that show the growth of your market in previous times and growth projections.
        
        Market Segmentation - How will you segment the market and which segments will you attack? Will you do it together or attack them in a specific order? - Because?
        
        Competitive Market Strategy / Competitive Advantages
        How will your company compete in the market? Will you compete on price, service, quality, convenience, new features and benefits, targeting a very specific market area (niche), etc.? Is this difference really significant for the consumer?
        Operations and Production
        • How is the company organized? - How will it look when it is operating on a routine basis? - What office space is necessary? What human resources will you need? Will you use in-house accountants or outsource to outsiders? How will the purchase and sale orders be raised, and how will the collection be made? etc.
        Sales and Distribution
        • How will you provide the final consumer with your products? (For more information, visit our Sales and Distribution information page).
        Illustrative Financial Projections
        You have to provide a set of financial projections that show the financial implications of your plan.
        
        Financial Requirements and Investment Structure
        You need to make it clear to the investor how much capital you will need, how it will be used, what he will get in return, and when he can expect his return on capital.
        The Financial Plan:
        The Financial Plan is the quantified version of your project and your credibility with investors will depend heavily on this - do it right and you will give them the confidence they need.
- - - - "THE QUADRANT OF MONEY FLOW"
        The authors begin by explaining that it is The Cash Flow Quadrant and it is nothing more than the division that they make about the types of people that we can find anywhere in the world:
        E = employees
        A = self employed
        D = business owners
        I = investors
        
        Employees, they tell us, are people who seek security and try to obtain the greatest benefits, seek stability and firm and concrete agreements when getting a job and often say that they are not interested in money, and not because it is true but because get to lose it. The self-employed, they clarify, are people who want to do things their own way and dislike receiving orders and being subservient, they do not like to depend on anyone.
        The Cash Flow Quadrant simply marks the differences on how income is generated and the authors invite us to reflect and decide on which side and type of the quadrant we want to locate ourselves, since this will guide us to obtain financial security and reach the so coveted financial freedom.
- - - - The objective of each of them is to provide information to determine the financial viability of the investment. It is not intended to carry out technical, commercial, administrative, legal or other feasibility studies, although, when in each of these areas there is more than one reasonably viable alternative, it is necessary to evaluate which of them is optimal from the point of view of economic rationality.
        
        Market research.
        
        It basically consists of the determination and quantification of demand and supply, the analysis of prices and the study of marketing.
        
        Technical study.
        
        This part of the study can be further subdivided into four parts:
        
        Determination of the optimum size of the plant.
        
        Determination of the optimal location of the plant.
        
        Project engineering.
        
        Administrative analysis.
        
        Economic Evaluation.- In the evaluation methods, the value of money over time is taken into account, such as the Internal Rate of Return (IRR) and the Net Present Value, their application limitations are noted and they are compared with accounting methods of evaluations that do not take into account the value of money over time.
        Risk Analysis and Management.- In general, the last part dealt with in the Economic Evaluation Feasibility Study, which presents us with a completely new approach to risk that can be applied in unstable economies, unlike other more restricted application approaches.
        Social evaluation of projects.- The social evaluation of projects seeks to measure the true contribution of the projects to the economic growth of the country.
        
        Project Evaluation aims to address the problem of resource allocation explicitly, recommending through different techniques that a certain initiative is carried out over other project alternatives.
        This fact implies a social responsibility of profound repercussions that affects in one way or another the entire social conglomerate, which forces the proper use of technical standards and standards that allow demonstrating that the destination that is intended to be given to the resources is optimal.
- - - - Cost of newly issued common shares or outside equity ke
        It is based on the cost of retained earnings, but is increased by float costs, which should be the cost of new common stock.
        Weighted Average Cost of Capital or WACC Composite Cost of Capital
        Capital structure is that mix of debt, preferred stock, and common stockholders' equity that leads to maximizing your share price through the optimal capital structure financing to maintain your goals.
        MCC marginal cost of capital
        It is the cost of obtaining another unit of that same item, it is the cost of the last dollar of new capital that the company obtains, and the marginal cost will increase as more and more capital is obtained during a given period.
        Cost of Capital Problem Areas
        Funds generated by depreciation, the flows generated can be reinvested or sent to investors (shareholders and creditors).
- - - - Outside Financing: funds that the company has received from other people who are not the owners. This financing involves a cost through the payment of interest and expenses or commissions. The most common are:
        o Advance collections and deferred payments
        o Reimbursable subsidies from public or private organizations (returned)