Overview

This book summarizes more than thirty years of teaching and professional practice, during which I have reviewed the existing literature and new trends. In almost all the documents reviewed, a theoretical approach predominates to the detriment of practice. The book is written in a language easy to understand for any professional, other than the economic field. In it I clarify some conceptual errors, common in other books, and I explain the theoretical and practical elements that are required to formulate or evaluate investment projects, from a social or private point of view, under conditions of certainty or uncertainty. It includes formats and examples that facilitate the interpretation and application of the exposed concepts and algorithms. The content is shown in ten chapters. The first includes the main definitions and classifications of projects, social capital as a determining element in the success of projects and the initial process of project conception. In the analysis of the framework of economic, political and social factors that influence the success of a project, the analysis of Social Capital was included. The second chapter focuses on the study of the market, begins with the description of the product and its area of influence, the quantification of supply as well as demand, to then determine the available market for the project. The quantification of the demand is determined according to the type of good or service (Final Consumption, Intermediate Consumption or Capital), explaining the methodology that is applied in each type of good. It also includes marketing analysis and incorporates a new aspect such as marketing of agricultural products. Another aspect that has not received the attention it deserves is the location of the projects, which depends on a set of regulatory, economic and political factors. Therefore, this chapter has been expanded by incorporating the details necessary for the determination. In addition, an application was added to be developed in Excel, which allows determining the optimal location in terms of distances to a specific area, using geographic coordinates. The investment analysis indicates how the different investment items in land, buildings, machinery and equipment should be calculated and classified, as well as working capital and contingencies. The Income and Expenses budget explains the methods of calculation and projection of the volume and value of sales, collection and accounts receivable, as well as the projection of the cost structure. In the case of operating companies, the greatest weight of the decision falls on the financial situation of said companies, therefore, we include a chapter dedicated to the analysis of the financial statements, in a clear and simple way that any professional can understand and Apply. In addition to explaining how the main financial statements are projected, the formulas for calculating the main financial ratios and financial indicators such as the Breakeven Point and the Debt Coverage Index are indicated. Through the projected cash flow, we explain how the profitability of the project and investors is calculated, using the Internal Rate of Return. This chapter addresses the issue of shadow, social or scarcity prices and the social discount rate, which allow projects to be evaluated from a social point of view, calculating their social profitability. Another aspect of great importance not considered in the existing literature is the measurement of project risk. Chapter IX addresses another topic of great importance that constitutes something new, such as the valuation of companies in operation, defining the main concepts and describing the most common calculation methods in this activity, with their respective formulas. Chapter X indicates the bibliography consulted.

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