Financial analysis of the production and commercialization of organic fertilizer

from waste of poultry farm.

To initiate with the economic and financial analysis of this project in the first
instance there will be calculated the initial investment, which divides in fixed
and deferred investment. In the first one there are included all the material
resources necessary to be able to operate (machines, furniture, vehicles, tools,
etc.) whereas in deferred investment it is considered to be the investment in
deferred expenses, which include administrative expenses of the project as
them it are planning, engineering, supervision, between others. The total of the
initial investment is of $ 5, 532,372.00 In the estimation of the operative costs,
we will start by calculating the costs of production, for it we base on the cost of
the inputs and raw materials necessary for the manufacture of the organic
fertilizer like them they are the poultry droppings, worm, organic material and
the costal one to pack the product. Hereby we obtain a total cost of our product
of 3.58 $ for kg. Immediately budgeted the fixed costs referred to workers,
distributors, analysts, general manager and assembly of advice, with a total of
148.000 $ every month. As for the costs or indirect expenses the sum is of
84,869.55 $. A fundamental part of the present project is the estimation of the
productive capacity and of the forecast of the sales; both have great influence
in the investigation of market that was realized before and also in the capacity
of the equipments of process for the production of the fertilizer. Considering the
price of our product to 11.00 $ for kg and 788,160 units produced in one year
we obtain a revenue for sales of 3 $, 069,000 for the first year; then the
condition of results appeared for the first five years of the project and having
like that a clear negative usefulness the first two years. For the fifth year the
clear usefulness turned out to be of 1 $, 062,186. The criteria to determine the
profitability of the project from the economic point of view are obtained of the
financial study and are in use for calculating economic indicators as the
minimal acceptable rate of performance (TMAR) which was calculated like: Free
rate of Risk + Inflation + Occupies first place throwing ourselves a value of 11
%; the sum of the flows of cash to present value of 2 $, 227,106 and the rate
hospitalizes of recovery (TIR), being this of-9 %. Doing the calculation of the
present clear value (VPN) our result was of-$3, 305,266. With base in the
previous analysis and the obtained results we can affirm that our business is
not economically viable with a price of sale of 11.00 $ for kg. Nevertheless the
business might be very promising establishing a price of sale of 20.00 $ for
unit.