HKSTP Lunch & Learn – Finance for Non-Financial People

HKSTP Lunch & Learn named “Finance for Non-Financial People” was launched on 21 Feb 2017 for acquiring the investment appraisal techniques.  The agenda included “Objective”, “SWOT”, “Operating Plan” and “Financial Model”.

In Objective session, we analyzed “Why”, “When” and “How” as follows:

i)                    Why

-          Evaluate the profitability of an investment to determine if it is worthwhile;

-          Compare different projects to determine which is more valuable

ii)                  When

-          Newly introduced requirement (e.g. Capex or Opex >$500k)

iii)                How

-          Step-by-step guide on preparing procurement request and investment appraisal

-          Demonstrating example

Then 7 key elements of investment appraisal was introduced and they were:

1.      SWOT

2.      Justification / Rationale

3.      Operation Plan – Marketing and Promotion

4.      Operation Plan – Operating model + resources

5.      Operation Plan – KPI

6.      Operation Plan – Milestones + Exit Plan

7.      Financial Model

For SWOT analysis, it demonstrated the Strength, Weakness, Opportunity and Threat as well as Internal & External.

For Operation Plan, they should consider:

i)                    Marketing and Promotion

-          Target customer

-          Sales channel

-          Value propposition

ii)                  Operating Model

-          Partner

-          Outsourced

-          Internal operate

iii)                Incremental resources

-          Expertise

-          Headcount

-          Space

-          Capital

iv)                KPI

-          Quantitative

-          Qualitative

v)                  Milestones

-          Preparation time

-          Start of operation

-          Ramping up

-          Project Review

vi)                Exit strategy

-          Worst case

-          When to exit

Financial model included time frame for evaluation, business drivers and assumptions.

P/L example was mentioned.

Finally, the measuring investment return was explained and they included Cash Impact, Payback Period, Net Present Value (NPV) and Internal Rate of Return (IRR).

Reference:

HKSTP - http://www.hkstp.org