Section 5 Estimation of Financial Costs and Benefits
1. Analysis and determination of the project calculation period:
1. Project calculation period: carried out during the economic evaluation The period set by dynamic analysis includes the construction period and the operation period.
(1) Construction period: refers to the time required from the formal investment of project funds until the project is completed and put into production.
Construction period: The time required for the project from the groundbreaking of the site to the completion and commissioning of the project.
For existing legal person financing projects, there is generally no difference between the construction period and the construction period. However, new legal person projects need to register the company first, and investors will need to invest funds at that time, and then the project can start construction. Construction, so the starting points of the two will be different, so the construction period may be longer than the construction period.
(2) Operation period: Generally, it should be determined based on the economic life period of the main equipment of the project.
2. Determination of financial benefits
1. Content of financial benefits
(1) Operating projects operated in a market-oriented manner refer to the business obtained income. For VAT that is collected first and refunded later, the financial analysis can be treated differently from the actual situation, without considering the time difference between "levy" and "refund".
(2) For non-operating projects, subsidies should be regarded as the financial benefits of the project.
(3) For projects that provide quasi-public products or services to the society and adopt business methods for operation and maintenance, the financial benefits include operating income and subsidy income.
2. Operating income
(1) Operating income refers to the income from selling products or providing services. It is the main body of cash inflow in the cash flow statement and the main component in the income statement. suject.
(2) Determination of annual operating volume: Calculated after determining the load rate based on experience or determined by formulating a sales (operation) plan. The nature of the project, the difficulty of mastering the technology, the maturity of the product, and the degree of market development should be considered when making the decision.
Based on the results of the market forecast and combined with the nature of the project, output characteristics and market development level, an annual operation plan is formulated to determine the output quantity for each year.
The sales revenue of main and by-products (or products of different grades) should all be included in operating income, and the income from different types of services provided by other industries should also be included in operating income at the same time.
3. Subsidy income
Including value-added tax that is collected first and then refunded, fixed-amount subsidies calculated based on sales volume or workload, etc. based on the subsidy quotas stipulated by the state and given on a regular basis. Other forms of subsidies provided by financial support.
Subsidy income, like operating income, should be included in the profit and profit distribution statement, financial plan cash flow statement, project investment cash flow statement and project capital cash flow statement.
3. Estimation and Analysis of Operating Costs
1. The Concept of Costs
Costs: a general term for various expenses incurred in project production and operation. .
(1) Cost: refers to the various expenses incurred by an enterprise to produce products and provide services; costs are collected near certain objects, relative to certain products, and related to certain types and types. quantity of products or commodities, regardless of which accounting period they occur;
(2) Expenses: refer to the outflow of economic benefits incurred by an enterprise for daily activities such as selling goods and providing labor services. Expenses are consumption of assets and are tied to an accounting period, regardless of which product is produced.
2. Classification of costs and expenses
(1) According to calculation scope: unit product cost and total cost and expenses;
(2) According to cost and output The relationship is divided into: fixed costs and variable costs;
Fixed costs: various costs and expenses that do not change with product output; mainly include: wages (except piece-rate wages), depreciation expenses, and intangible asset amortization expenses , management fees and other expenses, long-term borrowing interest, working capital borrowing interest and short-term borrowing interest, etc.
Variable costs: Various expenses that change in proportion to the increase or decrease in product output; including: purchased raw materials, fuel and power consumption, packaging fees, piece-rate wages, etc.
(3) According to accounting requirements: manufacturing costs and production costs;
(4) According to financial evaluation requirements, there are operating costs.
3. Operating costs
Operating costs = purchased raw materials, fuel and power fees, wages and welfare fees, repair fees and other expenses
Operating costs are project cash flows The main part of cash outflows during the operating period in the table, operating costs have nothing to do with the financing plan.
Operating cost estimation is highly industry-specific, and different industries may have large differences in cost components and names.
4. Total cost and expense (during the operation period)
(1) Total cost and expense composition and calculation formula
1) Total cost and expense = production cost period Expenses
Among them: production cost = direct material cost, direct fuel and power cost, direct salary, other direct expenses, manufacturing overhead
Period cost = administrative expenses, operating expenses, financial expenses
2) The production factor estimation method is
Total costs = purchased raw materials, fuel and power expenses wages and welfare expenses depreciation expenses amortization expenses repair expenses financial expenses (interest expenses) other expenses
Among them: other expenses are the same as other expenses in operating costs.
(2) Use the production (service) cost plus period expense method to estimate the total cost
It is necessary to first estimate the production (service) cost of each sub-unit separately, and then add it up to get the total cost. The production (service) cost is then added to the period expenses (administrative expenses, operating expenses, financial expenses) to obtain the total cost
3. Estimation of each sub-item of the total cost according to the production factor estimation method Key points
Attention should be paid to each sub-item estimate:
(1) Data required for outsourced raw materials and fuel and power costs:
1) Annual consumption;
2) Forecast price;
3) Applicable value-added tax rate.
(2) Estimation of labor wages and welfare fees:
1) Project nature, domestically funded projects need to calculate welfare fees accounting for 14% of the total wages in accordance with regulations;
2) Project location;
3) Original enterprise salary level;
4) Industry characteristics;
5) Average salary or graded salary.
(3) Estimation of original value and depreciation of fixed assets
1) Concepts of total investment, fixed assets, intangible assets, and other assets in project evaluation
①Total investment: refers to all the investment required for project construction and operation (the estimated range is consistent with the current total investment), which is the sum of construction investment, interest during the construction period and all working capital.
② Fixed assets: refers to tangible assets that have the following characteristics:
Held for the production of products, provision of labor services, leasing or operation and management;
The useful life exceeds one fiscal year.
③Intangible assets: refers to identifiable non-monetary assets without physical form owned or controlled by an enterprise.
④Other assets: formerly known as deferred assets. Refers to assets other than current assets, long-term investments, fixed assets, and intangible assets. Such as long-term deferred expenses.
2) Assets formed by total investment
① Fixed assets are formed, and the expenses that constitute the original value of fixed assets include: engineering expenses (equipment purchase fees, construction engineering fees, installation engineering fees) ; Other project construction costs; basic forecast fees and price increase reserve fees; interest during the construction period.
②Intangible assets are formed: technology transfer fees or technology management fees (including patent rights and non-patented technologies), trademark rights and goodwill.
③Other assets are formed: production preparation fees, start-up fees, personnel fees going abroad, personnel fees coming to China, translation and copying fees for drawings and materials, sample purchase fees, and agricultural development fees.
④Current assets: Current assets and current liabilities in the total investment constitute current assets.
3) Estimation of depreciation of fixed assets
Original value of fixed assets: refers to the part of fixed assets formed by investment according to regulations when the project is put into production (reaching the intended usable state).
Depreciation of fixed assets: Fixed assets will suffer wear and tear during use, and their value is compensated through depreciation.
Straight-line depreciation: average life method, workload method.
Quick depreciation: double declining balance method, sum-of-digits method.
①Depreciation calculation method of fixed assets:
i) Average method:
Annual depreciation rate = (1-estimated net salvage value rate)/depreciation Period /p>
Depreciation amount per unit mileage = original value × (1-estimated net residual value rate) / total driving mileage
Annual depreciation amount = depreciation amount per unit mileage × annual driving mileage
b) Calculate depreciation based on working hours:
Depreciation amount per working hour = original value × (1-estimated net salvage value rate)/total working hours
Annual depreciation amount = Depreciation amount per working hour × annual working hours
ii) Double declining balance method:
Annual depreciation rate = 2 / depreciation period × 100
Every year Depreciation amount = Net value of fixed assets at the beginning of the year × annual depreciation rate
Depreciation amount in the last two years = (Net value of fixed assets - Net residual value) ÷2
iv) Sum of years’ digits method:
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Annual depreciation rate = (depreciation life - number of years used) / [depreciation life × (depreciation life 1) / 2] × 100
Annual depreciation amount = (original value of fixed assets - estimated Net salvage value) ;
ii) Although the depreciation rate is the same in each year calculated by the double declining balance method, the annual depreciation amount becomes smaller year by year;
ii) Calculated by the sum-of-the-years’ digits method, the depreciation amount in each year is the same. The depreciation rate gradually becomes smaller, so the annual depreciation amount also becomes smaller year by year.
(4) Fixed asset repair cost calculation: major repair cost and small and medium repair cost
It can be calculated directly as a certain percentage of the original value of the fixed asset (deducting interest during the construction period).
(5) Estimation of amortization of intangible assets and other assets (deferred assets): land use rights as intangible assets;
1) Intangible assets: identifiable intangible assets: Patent rights, non-patented technologies, trademark rights, copyrights, land use rights;
Non-identifiable intangible assets: goodwill.
Note: The goodwill created by the enterprise cannot be regarded as intangible assets, and the goodwill purchased from outside can be included in the original value of intangible assets; land use rights are used as fixed assets to calculate depreciation.
2) The amortization of intangible assets is based on the straight-line method, excluding residual value.
3) Amortization of other assets is based on the straight-line method, excluding residual value.
(6) Other cost estimates:
1) Other manufacturing costs: calculated as a certain percentage of the original value of fixed assets (deducting interest during the construction period). Or calculated based on staff quota.
2) Other administrative expenses: calculated based on staff quota or estimated as a multiple of the total salary and welfare fees.
3) Other operating expenses.
4) Input tax that cannot be deducted: other expenses included in the total cost or listed separately.
(7) Financial cost estimation:
1) Long-term borrowing interest: refers to the interest that should be paid during the production period on the loan balance during the construction period (including unpaid construction period interest) .
i) Equal-amount principal and interest repayment method:
In the formula: a—annual principal and interest repayment amount (equal-amount annuity); ic—loan principal and interest at the beginning of the repayment start year and (including unpaid interest during the construction period);
i—annual interest rate; n—scheduled repayment period.
In the annual principal and interest payment: annual interest payment = loan balance at the beginning of the year × annual interest rate
Annual principal repayment = a-annual interest payment
Formula Medium: The balance of borrowings at the beginning of the year = ic - the accumulated borrowings repaid in the years before this year
ii) The method of repaying principal and interest in equal amounts:
In the formula: at——year t The amount of principal and interest repayment; ic - the sum of the principal and interest of the loan at the beginning of the year when the repayment starts (including unpaid interest during the construction period);
i - annual interest rate; n - scheduled repayment Expect.
Where: annual principal repayment = ic / n
Annual interest payment = accumulated principal at the beginning of the year × annual interest rate
Characteristics of the two repayment methods:
In the equal payment method of principal and interest, the total amount of principal and interest repayment is the same every year within the limited repayment period. As the principal is repaid, the interest paid each year decreases year by year, and the principal repaid each year increases year by year;
In equal installments of principal and interest repayment, the principal is repaid the same every year, and the interest paid is reduced year by year.
IV. Estimation of taxes and fees
The financial evaluation should explain the tax type, taxation method, tax calculation basis, tax rate, etc. If there is any tax reduction or exemption, the basis and the method of tax reduction or exemption should be explained.
In terms of accounting treatment, business tax, resource tax, consumption tax, land value-added tax, urban maintenance and construction tax and education surcharges are included in "business taxes and surcharges".
1. Value-added tax: Value-added tax = output tax - input tax
Output tax = tax-included income ÷ (1 VAT rate) × VAT rate = tax-exclusive income × Value-added tax rate
Input tax = cost of purchased raw materials, fuel and power including tax ÷ (1 value-added tax rate) × value-added tax rate = cost of purchased raw materials, fuel and power without tax x value-added tax rate
2. Business tax: It is an in-price tax and is included in operating income.
3. Consumption tax: levied on some goods.
4. Land value-added tax: levied on the value-added amount obtained from the transfer of real estate.
5. Resource tax: levied based on the output of minerals.
6. Corporate income tax: It is levied on the taxable income of enterprises.
7. Urban maintenance and construction tax and education surcharge. Calculated based on turnover tax.
8. Tariff: Taxable goods imported and exported are subject to tax.
9. Turnover tax: includes value-added tax, business tax, and consumption tax.
5. Maintain operating investment
In project evaluation, if the investment extends the service life of fixed assets or substantially improves product quality, it should be capitalized in advance. , that is, it should be included in the original value of fixed assets and depreciation should be provided. Otherwise, the investment can only be expensed and does not form a new original value of fixed assets.
VI. Cost estimation of non-operating projects
Regardless of whether there is operating income or not, costs need to be estimated. For specific methods and requirements, please refer to the above method, and prepare relevant reports for cost estimation. For projects with no operating income, cost estimates can be used to calculate unit functional cost indicators, compare and select solutions, and conduct viability analysis.
7. Financial benefit cost estimation report (clarify the calculation of each item in the table)
1. Construction project investment estimation table
2. Interest during the construction period Estimation table
3. Liquidity estimation table
4. Total project investment plan and fund raising table
5. Operating income, business taxes and surcharges Value-added tax estimate form
6. Total cost estimate form