Faculty of Engineering – Cairo University

Mechanical Design and Production Engineering

Two Semesters System – 3rd Year
Engineering Economy and Accounting – MDP306

Research Project Fourth Assignment

(Final Report)

Submitted To
Prof. Ehab Abdelhafiez

Prepared by Group 2
Ahmed Ashraf El-Esawi B.N: 1
Ayman Hisham Mahmoud B.N: 10
Mahmoud Ahmed El-Sayed Kassab B.N: 24
Mahmoud Mostafa Abdelsalam B.N: 27
Mariam Serag El-Din B.N: 28

June 1, 2020
Table of Contents

Table of Contents ............................................................................................................................. I

List of Tables ................................................................................................................................ III
List of Figures ............................................................................................................................... III
Abstract ......................................................................................................................................... IV
1. Introduction to Feasibility Study ............................................................................................ 5
1.1 Definition ......................................................................................................................... 5
1.2 Importance of Feasibility Study ....................................................................................... 5
1.3 Benefits Form Using Feasibility Study ............................................................................ 5
1.4 Example Application of Feasibility Study ....................................................................... 5
2. Types of Feasibility Study ...................................................................................................... 6
2.1 Technical Feasibility ........................................................................................................ 6
2.2 Schedule Feasibility ......................................................................................................... 6
2.3 Legal Feasibility ............................................................................................................... 6
2.4 Economic Feasibility ........................................................................................................ 6
2.5 Operational Feasibility ..................................................................................................... 6
3. Other Types of Feasibility Study ............................................................................................ 6
3.1 Managerial Feasibility ...................................................................................................... 7
3.2 Political Feasibility........................................................................................................... 7
3.3 Environmental Feasibility ................................................................................................ 7
3.4 Market Feasibility ............................................................................................................ 7
3.5 Real Estate Feasibility ...................................................................................................... 7
4. Economic/Financial Feasibility Study (EFS).......................................................................... 7
5. Steps for Economic Feasibility Study ..................................................................................... 8
Step One: Preliminary Analysis .................................................................................................. 8
Step Two: Prepare Income Statement ......................................................................................... 8
Step Three: Market Research ..................................................................................................... 8
Step Four: Plan Business Organization and Operations ............................................................. 8
Step Five: Prepare a Balance Sheet ............................................................................................ 8
Step Six: Review the Data .......................................................................................................... 9
6. Tables of Needed Inputs and Outputs for Each Step .............................................................. 9

I
 6.1 Income Statement Needed Inputs and Outputs ................................................................ 9
6.2 Market Research Needed Inputs and Outputs ................................................................ 10
6.3 Business Operations and Organization Needed Inputs and Outputs .............................. 11
6.4 Balance Sheet Needed Inputs and Outputs .................................................................... 12
7. Sample Templates for Each Step of EFS .............................................................................. 13
7.1 Income Statement Template ........................................................................................... 13
7.2 Market Research Framework ......................................................................................... 14
7.3 Business Operations and Organization Template .......................................................... 15
7.4 Balance Sheet Template ................................................................................................. 16
8. Calculations Needed for Each Step of EFS .......................................................................... 17
8.1 Income Statement Calculations ...................................................................................... 17
8.1.1 Cost of Goods Sold Calculations ............................................................................ 17
8.1.2 Gross Profit ............................................................................................................. 18
8.1.3 Net Income .............................................................................................................. 18
8.2 Balance Sheet Calculations ............................................................................................ 18
9. Case Example of an Economical Feasibility Study .............................................................. 18
10. Comparing Procedures ....................................................................................................... 19
11. Templates Analysis ............................................................................................................ 19
11.1 Income Statement Template ....................................................................................... 19
11.2 Balance Sheet Template ............................................................................................. 20
11.3 Market Research Framework...................................................................................... 21
11.4 Business Plan Operations and Organization Template .............................................. 22
12. Inputs Analysis................................................................................................................... 23
13. Outputs Analysis ................................................................................................................ 24
14. Calculations Analysis......................................................................................................... 25
Comments and Suggestions Regarding Feasibility Study in General and economic/financial FS
in specific. ..................................................................................................................................... 27
Relation Between MDP 306 topics and FS/EFS........................................................................... 28
Acquired knowledge/Skills ........................................................................................................... 29
Summary and Conclusion ............................................................................................................. 30
References ..................................................................................................................................... 30

II
List of Tables

Table 1: Inputs and Outputs of Income Statement.......................................................................... 9

Table 2: Inputs and Outputs of Market Research ......................................................................... 10
Table 3: Inputs and Outputs of Business Operations and Organization ....................................... 11
Table 4: Inputs and Outputs of Balance Sheet .............................................................................. 12
Table 1: Income Statement Inputs Analysis ................................................................................. 23
Table 2: Balance Sheet Inputs Analysis........................................................................................ 23
Table 3: B.P.O and Organ. Inputs Analysis .................................................................................. 23
Table 4: Market Research Inputs Analysis ................................................................................... 23
Table 5: Income Statement Output Analysis ................................................................................ 24
Table 6: Balance Sheet Output Analysis ...................................................................................... 24
Table 7: Market Research Output Analysis .................................................................................. 24
Table 8: B.P Operations and Organ. Output Analysis .................................................................. 24

List of Figures

Figure 1: Market Research Framework ........................................................................................ 14

Figure 2: Methods of Labor Cost Calculations ............................................................................. 17

III
Abstract

Types of feasibility study are many and each type has purpose and aim to achieve. So to start,
the first thing you put into your consideration the work you do needs which type of feasibility
study to conduct then after choose the right type you start to follow its standard procedure of work
obviously with little adjustments to suit your project and available market you work on.
Generally, there isn’t a particular way to do a feasibility studies that suits all projects types. but
there are familiar procedures or schools that used to do feasibility studies stages. The traditional
feasibility study is the most known procedure utilized specifically for private projects and for a lot
of the public projects. international procedures like the World Bank procedure and the Japan Grant
Aid are utilized widely for public projects that use international fund as their main core source for
its fund.

IV
1. Introduction to Feasibility Study

1.1 Definition
Feasibility study is the analysis of proposed plans or projects from economical, legal, and
technical point of view to see if it is worth investing or not.

1.2 Importance of Feasibility Study

As the name indicates, it’s a must to analyze a proposed plan to see if it’s feasible and to
see if the company have the resources required to complete the project, it also prevents the
company from investing time and money in a worthless project.

1.3 Benefits Form Using Feasibility Study

It’s necessary for any project to study its cost including every aspect of fixed, variable costs
and the revenue of the project also study all the alternatives so that the company can invest in the
right project that assures high revenue and benefit with the lowest cost possible.[1]

1.4 Example Application of Feasibility Study

You want to start a project of a small café with initial costs of “XX” and monthly expenses
of “X” including taxes, wages, and bills. The café pays off “Y” each month, so you conduct a
feasibility study to see if it’s worth investing in this project or not and to see if it is capable of
paying its own costs and still gives a revenue.

Page | 5
2. Types of Feasibility Study

2.1 Technical Feasibility

Companies and Factories do this study to make sure that they have the required technical
technologies to carry out the project (Hardware: Machines - Software: software program).

2.2 Schedule Feasibility

For any new project, the company must do schedule feasibility study to know if this project
match with the time plane for the company. Also, we do schedule feasibility to make sure that the
project will be finished on the estimated time.

2.3 Legal Feasibility

It is the responsibility of the legal team in your company. They do legal feasibility study for
any new project or contract to make sure that there are no legal or ethical problems.

2.4 Economic Feasibility

It is the most famous type of feasibility study. In this study, you will do cost/benefits
analysis to make sure that you will earn an acceptable profit after finishing the project.
For Example:
A workshop owner wants to replace his old center lathe machine with a new CNC center lathe
machine. He must do an economic feasibility study to make sure that he will gain great profit from
the new machine in a suitable time before paying more than 500,000 EGP for buying the new CNC
machine.
2.5 Operational Feasibility
In this study the company focus on its ability to solve problems which may face them during
carrying out the new project. Also, it focusses on the ability of using the advantage opportunities
which will appear during the project.
For Example:
The same workshop owner who will buy a new CNC machine. He must do operational feasibility
study to make sure that he can fix any software problems or do maintenance for the machine.

3. Other Types of Feasibility Study

There are other types of feasibility studies which check the feasibility of the milestones of your
project. You can do them to ensure your success. [2]

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 3.1 Managerial Feasibility
Before taking a decision about doing a project or not, you must check if your company have
good management structure who will complete this project on time. Managerial Feasibility study
work on creating this management structure.

3.2 Political Feasibility

Simply, this study check if your project will build any argument with the government or if
your project can take the government support.

3.3 Environmental Feasibility

Basically, we use this study while carrying out a large project like chemicals factory. It
studies your factory impact on the environment.

3.4 Market Feasibility

It is a very necessary feasibility study. It studies the market and people need of your product
or your business. You cannot buy anything. If people do not need to buy it.

3.5 Real Estate Feasibility

Real-estate feasibility study the place and the area where you will carry out you project. It
searches about how your project your impact the market in your area.

4. Economic/Financial Feasibility Study (EFS)

Its feasibility study aims to show the net benefit on a proposed project to take decision whether
to accept or reject it, taking into consideration cost/benefit analysis of the project to help the
organization to determine the cost, benefit, and viability related to it before the financial resources
to be allocated. EFS also serves the evaluation and enhances the project's credibility to help taking
decisions of determining the economic positive beneficial to the organization that would be
provided to.
As for cost/benefit analysis :it determines whether benefit overcome cost and if it does what is the
period for the benefits to be accrued and lastly which alternative is the best considering of the
return of investment.[3]

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5. Steps for Economic Feasibility Study

Step One: Preliminary Analysis

First: Determine your plan: you should focus on unavailable products in the market.
Second: Analysis of the available markets.
Third: Determine your strength and weakness points in your plan.
Fourth: Assess the risks that may occur in the plan and determine how to fix these risks or how to
change your plan to reduce them.

Step Two: Prepare Income Statement

After knowing your goal from this project, you can expect your income based on the cost,
expenses, and expected sales.
This called income statement, the cost of services and any change to revenue must be taken into
consideration.

Step Three: Market Research

This step helps you to recognize
1- The competitors and their goods also price their selling strategy.
2- Customers’ desires and needs

Step Four: Plan Business Organization and Operations

It should be comprehensive including start-up costs, fixed investments, and operation
costs. Also, in your plan there should be determination of the fixed and the variable cost for
example:
1- Equipment
2- Merchandising methods
3- Facility location
4- Availability and cost of personnel
5- Supply availability (e.g., vendors, pricing schedules. exclusive or franchised products)
6- Overhead (e.g., utilities, taxes, insurance)

Step Five: Prepare a Balance Sheet

This sheet contains the assists and liabilities to do this make a list that includes item, source,
cost, and available financing.

Page | 8
Step Six: Review the Data
This step is one of the most important steps that must be taken in your consideration. You should
look at all your previous research again and recheck the income statement and make a comparison
with the balance sheet if the result doesn’t fit with your expectation, you must change your plan to
adapt to this change. [4]

6. Tables of Needed Inputs and Outputs for Each Step

6.1 Income Statement Needed Inputs and Outputs

Table 1: Inputs and Outputs of Income Statement

Inputs Outputs
Revenues Inputs
Sales
Service revenue
Inventories
Interest revenue
Other revenues

Revenues
Expenses Inputs
Cost of goods sold
Bills
Insurance
Commissions
Salaries and wages
Rent
Depreciation
Other expenses
Expenses
Earnings Before Taxes
Taxes % Net Income

Page | 9
 6.2 Market Research Needed Inputs and Outputs

Table 2: Inputs and Outputs of Market Research

Inputs Process Outputs

1- The need of your service Your Buyer persona:
or product. 1- Age
2- Your project location. 2- Gender
3- The expected cost of your Define your Buyer or 3- Location
product or services. Customer Persona 4- Job titles
5- Income
6- Major challenges
1- People who buy your
product.
2- People who buy your
Your Buyer persona Divide your buyer persona product from other
company.
3- People who do not buy
your product anyway

1- Contacts from your social

media page.
The people who you want to Search for the contacts of 2- Contacts from your
build your market research on your market research LinkedIn connections
participants 3- Contacts of your past
customers.

1- Your product 1- The name of your primary

definition. Find your competitors competitors & their
2- Your project product info.
location. 2- The name of your
Secondary competitors &
their product info.
1- The needed info about
your customer persona.
2- The needed feedback Prepare your survey
about your product or questions. Market survey
services
3- The needed feedback
about your competitors’
product or services.
1- Markets Contact Make the survey The needed Info to make
2- Market Survey market research

Page | 10
 6.3 Business Operations and Organization Needed Inputs and Outputs

Table 3: Inputs and Outputs of Business Operations and Organization

Inputs Outputs
Startup
Rent
Utilities
Computer Equipment
Employees’ Salaries
Computer software
Telephone
Insurance
Licenses and permits
Startup Costs
Fixed Investments
Equipment
Over head
Building
Machines
Total Fixed Investments
Operations
Marketing
Supplies
Market research
Postage / shipping
Total Operations Costs

Page | 11
 6.4 Balance Sheet Needed Inputs and Outputs

Table 4: Inputs and Outputs of Balance Sheet

Inputs Outputs
Assets Inputs
Cash and C.E
Account Receivable
Inventories
Prepaid Expenses
Short Term Investments

Current Assets
Long-Term Investments
Less Accumulated Depreciation
Property, Plant, and Equipment
Intangible Assets
Fixed Assets
Deferred income tax
Other Potential Assets
Other Assets
Liabilities Inputs
Notes Payable
Accounts payable
Accrued Taxes
Accrued salaries and wages
Short-term loans
Current Liabilities
Long Term debt
Deferred Income Tax
Long-term Liabilities
Shareholder’s Equity Inputs
Original Investments
Retained earnings
Shareholder’s Equity

Page | 12
7. Sample Templates for Each Step of EFS

7.1 Income Statement Template

Income Statement Template

(Company Name)
(Project Name) Date:

Revenues
Sales
Service revenue
Inventories
Interest revenue
Other revenues
Total Revenues
Expenses
Cost of goods sold
Bills
Insurance
Commissions
Salaries and wages
Rent
Depreciation
Other expenses
Total Expenses
Earning Before Taxes
Taxes
Net Income [5]

Page | 13
7.2 Market Research Framework
[6]

Figure 1: Market Research Framework

Page | 14
 7.3 Business Operations and Organization Template

Business Operations and OrganaizationTemplate

(Company Name)
(Project Name) Date:
Start-up
Rent
Utilities
Computer Equipment
Employees’ Salaries
Computer software
Telephone
Insurance
Licenses and permits
Total Start-Up Cost
Fixed investment
Equipment
Over head
Building
Machines
Total Fixed Investments
Operations
Marketing
Supplies
Market research
Postage / shipping
Total Operation Cost [5]

Page | 15
 7.4 Balance Sheet Template

Balance Sheet Template

(Company Name)
(Project Name) Date:
Assets
Current Assets
Cash and C.E
Account Recievable
Inventories
Prepaid Expenses
Short Term Investments
Accumlative Tax Prepay
Total Current Assets
Long Term (Fixed) Assets
Long-Term Investments
Less Accumulated Depreciation
Property, Plant, and Equipment
Intangible Assets
Total Fixed Assets
Other Assets
Deferred income tax
Other Potential Assets
Total Other Assets

Total Assets
Liabilities and Shareholder's Equity
Current Liabilities
Notes Payable
Accounts payable
Accrued Taxes
Accrued salaries and wages
Short-term loans
Unearned revenue
Total Current Liabilities
Long Term Liabilities
Long Term debt
Deferred Income Tax
Total Long Term Liabilities
Shareholder's Equity
Original Investments
Retained earnings
Total Shareholder Equity

Total Liabilities and Shareholder's Equity [5]

Page | 16
 8. Calculations Needed for Each Step of EFS

8.1 Income Statement Calculations

8.1.1 Cost of Goods Sold Calculations

Beginning inventory of raw material +

Material purchased +
End inventory of raw material -
= Direct material cost +
Direct labor cost +
Manufacturing overhead +
= cost of manufacturing +
Beginning inventory work in process +
End inventory of raw material -
= Cost of goods manufactured +
Beginning inventory of finished goods +
End inventory of finished goods -
= Cost of goods sold

Note That:
- Labor cost is calculated using
varies methods illustrated in
this Chart
- overhead costs also can be
calculated either by 4 methods
1-Direct labor hours
2- Direct labor dollars
3- Machine hours
4- Direct materials

Figure 2: Methods of Labor Cost Calculations

Page | 17
8.1.2 Gross Profit

𝐺𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡 = (𝑠𝑎𝑙𝑒𝑠 − 𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑)

8.1.3 Net Income

Net income =gross profit - (Selling General and Administrative Expenses + income taxes)

8.2 Balance Sheet Calculations

𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
1. Debt ratio =
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
2. Current ratio =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
3. Working capital = (current assets – current liabilities)
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
4. Assets to equity ratio =
𝑜𝑤𝑛𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
5. Debt to equity ratio =
𝑜𝑤𝑛𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦

*The rest of steps does not have calculations they are only documentation steps.

9. Case Example of an Economical Feasibility Study

The feasibility study that has been chosen is (Renault Feasibility Study) that provided by
(ABDULLATIF ALISSA GROUP) and it has been done on KSA market.
This feasibility study is done to see the benefits of Acquiring Renault franchise as an exclusive
dealership in the kingdom also to maximize shareholder business profitability and optimize the
utilization of the group infrastructure (economies of scale).
This feasibility study is little different because it is discussing the feasibility of a product not a
project so some aspect will be changed but we chose this feasibility study because it’s so similar
to the approaches we did previously. [7]

Page | 18
10. Comparing Procedures
The case study follows the same procedure that were approached previously exactly for
income statement and balance Sheet but the market research all the approach was presented in
graphs.
Business plan operations and organization successfully mentions the organization structure but on
the other hand it did not mention the financial part “Costs” of its segments, maybe -as we
mentioned- the reason is that, this feasibility study is for a product not for an established project.

11. Templates Analysis

11.1 Income Statement Template

• comparing the two templates there is no big difference in the out frame and the data that
filled in it

Page | 19
 11.2 Balance Sheet Template

• Comparing the two templates we

figure out that the main headlines are
the same but the detailed items are
hidden in the case example template,
which gives us a feedback that the
items are not necessary been given in
the balance sheet, and each company
uses the items which compatible with
their projects

Page | 20
11.3 Market Research Framework

• As discussed before there is no

specific template for the market
research its only has a framework
and in this study, framework was
presented in form of graphs.
showing Market share for each
brand, market growth of each
brand all this made for comparing
the sales in last two years
(2007/2008) then making a
forecast for market share and
sales growth for upcoming five
years (2009-2013).

Page | 21
11.4 Business Plan Operations and Organization Template

• Notice That, in this feasibility study the

business plan operations and organization
did not discuss the cost of each segment, it
mentions only the methods and strategies of
how to promote and eat a piece of market
share.

Page | 22
 12. Inputs Analysis
Table 5: Income Statement Inputs Analysis Table 6: Balance Sheet Inputs Analysis
Inputs in Assignment 2 Inputs in Case Example Inputs in Assignment 2 Inputs in Case Example
Revenues Revenues Assets Assets
Sales Units Sold Cash and C.E Current Assets
Service revenue Net Sales Account Receivable Non-Current Assets
Interest revenue Inventories
Prepaid Expenses
Other revenues
Short Term Investments
Expenses Expenses
Long-Term Investments
Cost of goods sold Net COS
Less Accumulated
Bills Operating Expenses Depreciation
Insurance Finance Intangible Assets
Commissions Property, Plant, and
Salaries and wages Equipment
Rent Other Potential Assets
Depreciation Liabilities Liabilities
Other expenses Notes Payable Current Liabilities
Taxes % Accounts payable Non-Current Liabilities
Long Term debt
Accrued Taxes
Table 7: B.P.O and Organ. Inputs Analysis Accrued salaries and wage
Inputs in Assignment 2 Inputs in Case Example Short-term loans
Start-Up Start-Up Shareholder’s Equity Shareholder’s Equity
Rent Rent Original Investments Equity
Utilities Licenses and permits Retained earnings
Employees’ Salaries Organization Structure
Insurance
Licenses and permits Table 8: Market Research Inputs Analysis
Fixed Investment Fixed Investment Inputs in Assignment 2 Inputs in Case Example
Equipment Buildings The need of your service
or product Aim & Purpose
Building
Your project location Targeting KSA
Machines
Defining Customers’
Operations Operations Your Buyer persona Persona
Marketing Marketing Strategy
Your product definition Car Brand
Supplies
Market Survey Making a Survey
Postage / shipping
Market Competitors Car Brands Competitors

Page | 23
 13. Outputs Analysis

Table 9: Income Statement Output Analysis Table 10: Balance Sheet Output Analysis
Outputs in Assignment. 2 Outputs in Case Example. Outputs in
Assignment. 2 Outputs in Case Example.
Total revenues Gross profit
Current Assets Total Current Assets
Total expenses Operating profit
Fixed Assets Total Non-Current Assets
Earnings before taxes Net profit
Other Assets Total Assets
Net income
Current Liabilities Total Current Liabilities
Long-term Liabilities Total Non-Current Liabilities
Shareholder’s Equity Total Liabilities
Total Equity
Table 11: Market Research Output Analysis Total Liabilities and Equity
Outputs in
Assignment. 2 Outputs in Case Example.
Age Age
Gender Gender
Table 12: B.P Operations and Organ. Output Analysis
Location Location Outputs in
Income Purchasing Capacity Limit Assignment. 2 Outputs in Case Example.
Job titles Job Titles Startup Costs Distribution Strategy
Major challenges Challenges and Solutions Total Fixed
The name of your Investments Promotion Strategy
primary competitors & Total Operations
their product info. Costs
The name of your
Secondary competitors
& their product info.
Market survey
People who buy your
product.
People who buy your
product from other
company.
People who do not
buy your product
anyway

Page | 24
14. Calculations Analysis

1. Gross profit =(sales - cost of goods sold) = (Net sales – Net COS)

2. Net income =(gross profit - (Selling General and Administrative Expenses + income taxes)
Net profit =

3. Here he had the ability to do a break-even analysis because he had alternatives that could
be compared to.

Page | 25
 𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
6. Debt to equity ratio =
𝑜𝑤𝑛𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦 =Total Debt to Equity
𝑡𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
7. Debt ratio = = Total Debt to Assets
𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
Are the same
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠
8. Current ratio =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
9. Quick ratio =
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒(𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡)

10. Return on Equity(ROE) =
𝑜𝑤𝑛𝑒𝑟𝑠 𝑒𝑞𝑢𝑖𝑡𝑦
Additional
calculations

𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒(𝑁𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡)

11. Return on Assets(ROA) = 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠

Page | 26
Comments and Suggestions Regarding Feasibility Study in General
and economic/financial FS in specific.

Feasibility studies are done for two main reasons, firstly for a project need to be conducted
by the executer himself it can be organization or individuals so the feasibility study is conducted
to see if this project is feasible or not but this study can’t assure the success of the project, secondly
if an organization provided a project and other organizations, companies or individuals present
their own feasibility study to persuade the provider that he is the most suitable for conducting the
project but this type make the executer obliged to its feasibility study, only if there is a big change
in market the feasibility study terms can be changed with previously agreed tolerance.
But Considering that the EFS has its known steps of procedure each step has its main elements as
this elements also have its subsidiary elements categorized to inputs and output so we should know
the exact inputs & outputs of our project and do the appropriate calculations for each element in
each stage then after that we should move along to next step until you have complete feasibility
study, with putting into consideration that each step has varies templets you choose from or you
can create your own template that suits your project and your company.

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Relation Between MDP 306 topics and FS/EFS

As our course was not focused on the feasibility studies in specific not many topics were used in
this research but topics to be mentioned:
1. Balance sheet and income statement that used in the EFS we took this in Accounting in
financial analysis topic as we learned what to be included exactly in them with considering
the individual differences for each project.
2. All financial ratios that calculated and used in EFS we took in our course like (Current ratio
and Quick ratio).
3. Break even analysis as used in our research to calculate the quantity of sales to first get
profit. We were exposed in our course in detail how to calculate the break even.

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Acquired knowledge/Skills

a. First, we have learned the power of teamwork that maintain a perfect output with a low
potential mistake. Second, we have gained the skills of research which enhanced our
ability of collecting information beside verifying it. Skills like that will help us in the
graduation projects. Last thing is that we have gained knowledge in the field of making
feasibility studies in general and economical feasibility study in special which will serve
the idea that engineer should not be aware of technical fields only, but he must be aware
of fields which could serve his needs.

b. Actually we expected to learn how to practically conduct a real feasibility study for such
a small real project, but in this research project we have learned the core science of
making feasibility studies -which is very useful- but does not fulfill the practical side.

c. Yes we can / we can prepare the income statement and the balance sheet and their simple
calculations and as for the market research and operational market plan we can only
analyze them and get the basic costs of a project and give a suggestion of how to
approach the market.

d. -I would make it individual and make it only one submission with holding online meetings
with students to discuss their problems.
-I would make them focus on engineering economy topics more than the feasibility study
(the topics related of machine economics and alternatives).
-Only one submission and to get a discussion comparing between two types of machines
in a project in an economical perspective point of view.

e. Like our previous research projects in all college courses, we saved them so they -
somehow- would help us in future. That is why we tend to make this research project more
practical, so anyone could follow its steps.

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Summary and Conclusion

A feasibility study is an analysis of the viability of an idea through a disciplined and documented
process of thinking through the idea from its logical beginning to its logical end and it is conducted
for many reasons:
1. To analyze the competitiveness of the business in the market.
2. To investigate the production and technical aspect.
3. To study the appropriate management set up of the business.
4. To analyze the financial feasibility of the business.
This gives the management an enough information to know about:
a. Whether the project can be done or not ?
b. Does the final product come with benefit on the intended users ?
c. Is there any more appropriate alternative ?

After doing all that, the management should make go or no-go decision.

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References

[1] D. Hofstrand and M. Holz-Clause, “What is a feasibility study?,” Ag Decis. Mak., no.
October, pp. 1–3, 2009.
[2] A. M. Pauceanu, “Business Feasibility Study,” Entrep. Gulf Coop. Counc., pp. 49–78, 2016.
[3] J. Matson, “Cooperative Feasibility Study Guide,” p. 17, 2000.
[4] J. Schaufeld and J. Schaufeld, “Feasibility Analysis,” Commer. Innov., pp. 63–74, 2015.
[5] Jon Wittwer, “vertex42,” EFS Procedure Templates, 2019. [Online]. Available:
https://www.vertex42.com/. [Accessed: 14-May-2020].
[6] TemplateLab, “TemplateLab - High Quality Document Templates,” Feasibility Study
Templates, 2013. [Online]. Available: http://templatelab.com/. [Accessed: 13-May-2020].
[7] ABDULLATIF ALISSA GROUP, “Renault feasibility study summary detailed,” Renault
Feasibility Study Summary, 2009. https://www.slideshare.net/haithamo/renault-feasibility-
study-summary-detailed?from_action=save (accessed May 21, 2020).

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