Increasing investment opportunities in the developing and changing world confuse many people. It is necessary to use the savings made under the pillow with the right information without risking the profit-making investments to be made with the loans drawn with low interest. People sometimes make investments with their own limited and not very explanatory internet researches. These often result in frustration. 

The most important item of a correct study and investment evaluation is in the Feasibility reports to be prepared by the experts. 

In this article, let’s take a look at what the Feasibility report is and why it is important. 

Firstly; 

What is a Feasibility Report? 

The feasibility report is the whole of the studies prepared for investments. These studies are the reporting that shows what the profitability will be if the investment is made. In short, it is a type of report that shows how “doable” the investment is. 

Industry / Market Research: 

The first part of the feasibility report is the part about the sector research. In general, the following topics should be included in the sectoral research section: 

• Identification of the investment or project 

• Identification of the product or service 

• Sectoral analysis 

• Supply situation 

• Demand status, targeted audience 

• Incentives and grants 

• Input markets 

• Sales and marketing strategies 

Technical Research: 

In this section, the place where the investment will be made should be stated with the reasons. It is one of the most important aspects of many investments. If we generalize too much, the topics that should be in the technical analysis part of any investment are: 

• Where is the place of establishment? 

• Explaining the technology to be used and the production process 

• Environmental valuation 

• Implementation plan 

Preparation of financial statements 

The last part and the most important part of the feasibility report is the financial feasibility part. The main purpose of the feasibility report is whether the investment is profitable or not. If it is profitable, it includes questions such as how profitable it is, whether the valuation results of the investment meet our expectations, and whether the payback period is satisfactory. Particular attention should be paid to the ROI (return of investment) period in new establishments. 

There are multiple stages in preparing financial statements here:  

• How much is the total investment (establishment, production, logistics, etc.) cost? 

• What is the amount of capital required on a sectoral and legal basis? 

• What are the fixed, variable and extraordinary expense items? 

• How soon will profits be made once operational? 

• From which channels and at what level will the cash flow be? 

• Calculation of the total investment amount 

• Determination of operating expenses 

• Estimated revenue and profitability expectation 

• Preparation of income statement 

We can summarize as above. 

Feasibility reports provide a broad insight into the area where the investment is planned. The fact that the things that are going well are going astray at some point indicates the lack of feasibility study. Therefore, these studies are also important to ensure that things continue to run smoothly. Actions that are vital for the project, such as knowing and avoiding situations that may pose risks, taking precautionary measures against possible risks, taking action in sudden developments, and creating resources in financial imbalances, are only possible with an efficient feasibility study. 

As İ&G Accounting, we are always with you to respond to the needs of our valued clients.