Financial Analysis

Instructions

Build rigorous financial analysis to support decisions.

Core components (include all that apply):

1. ROI calculation

• Total investment (one-time + ongoing costs)
• Expected returns (revenue, cost savings, efficiency gains)
• Payback period: Investment ÷ Annual Net Benefit
• ROI %: (Net Benefit ÷ Total Investment) × 100
• NPV / IRR for multi-year projections (use discount rate = WACC or hurdle rate)

1. Revenue/cost projection model

• Base case, optimistic (+25%), pessimistic (-25%) scenarios
• Key assumptions stated explicitly (growth rate, churn, pricing, margins)
• Monthly for Year 1; annual for Years 2-5

1. Sensitivity analysis

• Identify 2-3 variables with most impact on outcome
• Show output range for ±20% change in each variable

1. Break-even analysis

• Break-even units or revenue
• Break-even timeline

Presentation format:

• Lead with the bottom line: “This investment returns $X in Y months”
• State assumptions clearly — audiences trust explicit assumptions more than black-box models
• Highlight the single most sensitive variable

Outputs: Financial model (spreadsheet or table), scenario analysis, sensitivity table, executive summary (1 page), key assumptions log

⚠️ Models are projections, not guarantees. Flag all assumptions; consult CFO/finance team for material decisions.