Proving the investment using financial business case analysis

Problem

A small manufacturer was developing a new product line. The potential of the new line could easily dwarf the existing business. The company needed additional funds for development and working capital, but investors weren’t confident in their estimates.

Approach

The existing financial model needed tuning. Min-Likely-Max sales modeling was used to improve the quality and believability of the sales estimates. Inventory costs were linked to sales timing and adjusted for vendor lead times and order quantities to clarify cash flow requirements. Standard financial metrics, including NPV, IRR, GMROI and break-even point were integrated and sensitivity factors were added to simplify scenario analysis.

Results

TBD. This project is still in play today!