Assessing profitability
We gather information from management and through market research: with these we build models to calculate IRR (Internal Rate of Return) and NPV (Net Present Value) by estimating the additional cash flows from the investment. To this we also add other metrics to calculate returns on investment such as ROI (Return on Investment), ROCE (Return on Capital Employed), Payback Period and Break Eaven Point plus any other metrics that may be useful or required to make the most correct and informed choice possible. The models developed also include sensitivity analyses to better understand how much the return will vary as certain key inputs change, and to verify that in less favorable market situations than those predicted, the company wouldn’t be in a state of distress. Finally, we give our opinion on the investment project, which can also take into consideration more strategic and qualitative aspects in addition to financial and quantitative ones.