Profitability Analysis of Downstream Investment ProjectsEAV/PDP

Who should attend?

  • This course provides an in-depth understanding of the concepts behind the theory of capital budgeting, leading to an improvement of the analysis in investment profitability studies.
Audience :
  • Managers and staff concerned with decision affecting medium and long term cash flows (such as investment, disinvestment and acquisitions); people who need to improve their understanding of the theory and the practice of investment analysis.

Level : Proficiency

Course Content

  • ECONOMIC CRITERIA

      • Value creation, capital cost and discount rate of a company.
      • Equity and debt, Corporate finance and return on capital, ROCE and ROE.
      • Cash flows and discounting principle.
      • Net Present Value (NPV), Internal Rate of Return (IRR), Pay-Out Time (POT), financial exposure, profitability index.
  • GLOBAL PROFITABILITY ANALYSIS

      • Analysis of operating cash flows and economic criteria.
      • Return on capital employed.
      • Profit and Loss accounts and associated project income taxes.
      • Impact of taxation and inflation in profitability investment studies.
      • Choice of an investment program with a limited budget, scarcity cost of capital.
  • RISK ANALYSIS

      • Risk analysis methodology.
      • Sensitivity analysis in investment decision, Spider and Tornado charts.
      • Limits of sensitivity analysis.
  • CASE STUDIES ON INVESTMENT PROFITABILITY

      • Octane improvement: implementation of isomerization and/or alkylation process units.
      • Hydrocracker project.
      • Refinery project.
      • Steam cracker project.

Learning Objectives

  • On completion of the course, the participants will be able to:
  • use tools related to an investment profitability analysis,
  • incorporate terms of financing plans in equity profitability analysis,
  • build complex computer models for cash flow analysis,
  • carry out risk analysis of investment projects.

Ways & Means

  • Case studies and exercises derived from actual refinery situations.