Business case: profitability calculation in the company

Central building blocks of professional business cases

• Management summary, strategic project overview.
• Proof of economic viability and project details.
• Elevator pitch.

Possible decisions in a business case

• Yes-no decisions (investing: yes vs. no).
• Timing decision (investing: now or later).
• Selection decision (invest in alternative A, B or C).

Objectives and intention behind the profitability analysis

• Assessment of important projects and strategic decisions.
• Confidence in communicating with internal decision-makers and external consultants.

The added value of target achievement

• Productivity, profitability and marketability.

Estimate costs and investment in necessary measures

• Procedure - data sources and calculation method.
• The business case as a financial investment: discount factor (Weighted Average Cost of Capital WACC).
• Calculation parameters: Cash flow, net present value (NPV), internal rate of return (IRR), amortization period (payback or break-even).
• Impact on profit and liquidity in the company.