This document discusses evaluating fixed capital requirements to improve business growth. It includes an agenda covering assessing fixed capital performance, understanding needs for land, buildings, and machinery, and evaluating expansion and replacement needs. Techniques to be considered include net present value, internal rate of return, payback period. The implementation plan involves inventorying assets, assessing conditions, establishing maintenance plans, identifying failure impacts, and developing optimization and funding strategies. Software can help manage assets, reduce downtime, and provide project snapshots and depreciation methods. Dashboards can track asset values across categories.

1. Fixed Capital
Evaluation
to improve Business Growth

2. AGENDA
2
Assessing fixed capital requirements and performance in our company.
Understand the need of fixed capital investment i.e. Land, Building and
Plant & Machinery to produce the required level of finished goods for
the market.
The evaluation is needed for finance expansion, development
programmes and affect equipment replacement.
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3. Table
of
Contents
3
• Current Challenges Faced by Our Company
• Fixed Asset Turnover Ratio Over Past 10 Years
• Calculation of Depreciation on Fixed Assets
• Net Present Value
• Internal Rate of Return
• Payback Period
• Which is the Best Investment Measure Technique?
Current Situation Analysis
Need of Fixed Capital Evaluation
Factors Affecting the Requirement of Fixed Capital
Sources of Fixed Capital
Techniques Considered to Evaluate Fixed Capital
Implementation Plan
Impact of Fixed Capital Evaluation
Fixed Asset Management Software
Fixed Asset Dashboard

4. 4
01
• Current Challenges Faced by Our Company
• Fixed Asset Turnover Ratio Over Past 10 Years
• Calculation of Depreciation on Fixed Assets
Current Situation Analysis

5. Current Challenges Faced by Our Company
5
The purpose of this slide is to provide a glimpse of the problems faced by our company at present due to capital budgeting, fixed asset turnover ratio, asset management practices, etc.
Your Text Here
Inaccurate Capital
Budgeting
decisions involve an outlay of huge
sums of money
67%
in Productivity
and increased equipment downtime due
to poor asset management practices
such as irregular maintenance
48%
Fixed Asset Turnover Ratio
since assets aren’t able to produce
enough revenue
0.59x
01
03 04
02
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6. Fixed Asset Turnover Ratio Over Past 10 Years
6
This graph illustrates the decreasing fixed asset turnover ratio of the company over past years due to underutilization of fixed assets.
Key Takeaways
Low ratio indicates over
investment in fixed assets
Inefficient utilization of assets
leads to low revenue
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2.392
2.3
2.5
2.7
2.9
3.1
3.3
3.5
2010 2012 2014 2016 2018 2019
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7. Calculation of Depreciation on Fixed Assets
7
The purpose of this slide is to provide a glimpse of the asset depreciation calculation for past 5 years covering book values, depreciation rate, expenses, accumulated depreciation etc.
Beginning Book
Value
Total
Depreciable Cost
Depreciation
Rate
Depreciation
Expenses
Accumulated
Depreciation
Ending Book
Value
$1000 $800 $33.33% $266.67 $266.67 $733.330
$733.33 $800 $26.27% $213.33 $480 $520
$520 $800 $20% $160 $640 $360
$360 $800 13.33% $106.67 $746.67 $253.33
$253.33 $800 6.67% $53.33 $800 $200
1
2
3
4
5
Y
E
A
R
S
Net income, retained
earnings, and stockholder’s
equity are reduced due to
depreciation expense
Assets value decreases
over time either through
use or obsolescence
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Key
Takeaways
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8. 8
02Need of Fixed
Capital Evaluation

9. Need of Fixed Capital Evaluation
9
This slide focuses on the need of fixed capital evaluation in a company such as collateral security, financial reports and audits, capital budgeting, etc.
Provide financial
reports and audits for
the investors to decide the
worth of the company
For loan and bank
collateral, valuation of an
asset is important
For taxation, every
company needs to pay taxes
for the property or any other
asset they owned. Asset
valuation will calculate the
taxes accurately.
For capital budgeting
in order to create a realistic
forecast of future
developments
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10. 10
03Factors Affecting the
Requirement of Fixed Capital

11. Factors Affecting the Requirement of Fixed Capital
11
This slide focuses on the factors affecting the requirement of fixed capital in our company such as nature of the business, scale of operation, production technique, technology
upgradation, growth prospects, diversification, etc.
D E TAI L S
Nature of Business Our company needs more fixed capital since it is a manufacturing company
Scale of Operation Being a large scale company, more machinery and assets are required by the firm
Technique of Production Our company uses capital intensive technique thus require more fixed capital in the company
Technology Up-gradation
Due to introduction of new technology old machines becomes obsolete which creates a necessity of purchasing
new equipment
Growth Prospects Our company is planning to expand and have higher growth plan and expand production capacity
Diversification Company plans to diversify the activities by including more range of products which means more fixed capital
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F
A
C
T
O
R
S
I
N
V
O
L
V
E
D
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12. 12
04
Sources of Fixed Capital

13. Sources of Fixed Capital
13
This slide focuses on the sources of fixed capital such as owner’s own resources, issue of shares, issue of right shares, private placement of shares, issue of debentures, term loans,
retained earnings, lease financing, etc
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07
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Owner’s Own Resources
• Equity Shares
• Preference Shares
Issue of Shares
01
• By issuing shares to its
existing shareholders
• Rights issue is very economical to
collect fixed capital.
Issue of Right Shares
02
• By selling its shares directly to a
small-group of investors such as
bank, insurance companies, financial
institutions, mutual funds, etc.
Private Placement of Shares
03
• Debenture holders gets interest
on the capital contribution made
by them to the company
Issue of Debentures
04
• Company gets term loans
obtained by the bank and other
financial institutions
Term Loans 05
• The undistributed profits saved by
the company are used as source of
fixed capital. It is the cheapest
source since no interest is paid
Retained Earnings 06

14. 14
05Techniques Considered to
Evaluate Fixed Capital
• Net Present Value
• Internal Rate of Return
• Payback Period
• Which is the Best Investment Measure Technique?

15. Net Present Value
15
This slide covers the technique which will help the business to see its present value of future cash inflow and evaluate the good investment in the asset.
New Equipment 550,000
Add: increase in working capital 130,000
Less: after-tax sale proceeds of existing equipment (92,000)
Initial investment 588,000
Cash Flow Numerator Denominator Discounted CF
CF1 130,000 (1 + 12%)1 116,071
CF2 145,000 (1 + 12%)2 115,593
CF3 151,000 (1 + 12%)3 107,479
CF4 139,000 + 280,000 (1 + 12%)4 266,282
Total PV 605,425
Initial Investment (588,000)
NPV 17,425
After-tax Proceeds from Disposal = $100,000 − ($100,000 − $80,000) × 40% = $92,000
Net cash flows for Year 1 equals $130,000:
CF1 = ($300,000 × (1 - 50%) - $100,000) × (1 - 40%) + $100,000 = $130,000
Using the same equation, net cash flows for Year 2, Year 3, and Year 4 equal $145,000; $151,000 and $139,000.
Key Insights
The project’s net present
value is higher than zero, it
is a good investment.
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16. Internal Rate of Return 1/2
This slide calculates the annual compound interest rate at which investment’s NPV is zero.
Equipment A 550,000
Working Capital B 130,000
Sales proceeds of equipment disposed off C 100,000
Carrying value of equipment disposed off D 80,000
Taxable gain E= C-D 20,000
Tax on gain @ 40% F= E*40% 8,000
After – tax sales proceeds G= C-F 92,000
Total initial investment outlay H=A+B-G 588,000
Year 0 1 2 3 4
Cash inflows 300,000 350,000 370,000 330,000
Less: Operating costs @ 50% 150,000 175,000 185,000 165,000
Operating cash flows before tax 150,000 175,000 185,000 165,000
Less: Depreciation (Straight – line) 100,000 100,000 100,000 100,000
Income before tax 50,000 75,000 85,000 65,000
Less: Taxes @ 40% 20,000 30,000 34,000 26,000
Net Income 30,000 45,000 51,000 39,000
Add: Depreciation 100,000 100,000 100,000 100,000
Net Operating Cash Flows 130,000 145,000 151,000 139,000
Terminal Cash flow 280,000
Initial Investment Outlay -588,000
Net Cash Flows 130,000 145,000 151,000 419,000
Period Cash Flow PV Factor
@ 10%
PV @ 10% PV Factor
@ 15%
PV @ 15%
0 (588,000) 1.0000 (588,000) 1.0000 (588,000)
1 130,000 0.9091 118,182 0.8696 113,043
2 145,000 0.8264 119,835 0.7561 109,641
3 151,000 0.7513 113,449 0.6575 99,285
4 419,000 0.6830 286,183 0.5718 239,565
NPV 49,648 (26,466)
› NPV at 10% is positive and
NPV at 15% is negative so we
know IRR must be between
10% and 15%
› Products whose IRR is higher
than the company’s cost of
capital are good investments
Key Insights
IRR = 10% +
IRR = 10% +
IRR = 10% + 3.26% = 13.26%
$ 49,648 * ( 15% - 10% )
$ 49,648 – ( - $ 26,466 )
$ 49,648 * ( 15% - 10% )
$ 49,648 + $ 26,466 )
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Initial Investment
01
Net Project Cash Flow
02
NPV calculation @10% and 15%
03
IRR calculation
04
16

17. -$200
-$100
$0
$100
$200
$300
$400
$500
0% 10% 20% 30% 40% 50% 0% 70% 80% 90% 100%
IRR
Internal Rate of Return 2/2
17
This graph calculates the annual compound interest rate at which investment’s NPV is zero. The product with higher IRR is usually selected.
NPV as Function of Discount Rate
Discount Rate
NPV
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18. Payback Period
18
This slide calculates the payback period of the fixed asset which is the time required to recover the cost of total investment in the business.
0.
PAYBACK
PERIOD
Lower payback period signifies
quick break even for the company
and hence the business productivity
can be easily observed.
Management looks for a lower
payback period
Key
Insights
Initial Investment or Original Cost of the Asset
Cash Inflows
1 Million / 2.5 Lakh
4 Years
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19. Which is the Best Investment Measure Technique?
19
This slide evaluates the best technique which our company will consider to evaluate the organization’s fixed capital.
NPV considers time value
of money
Our Company will
consider NPV method
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Key
Insights
02
• Ignores the economies of scale
• Same rate is assumed for the
discounting and reinvestment
IRR
01
• NPV calculates present value of
cash flow based on opportunity
costs of capital
NPV
03
• Ignores time value of money
• Do not consider cash flow
PBP
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20. 20
06
Implementation Plan

21. Fixed Capital Evaluation Implementation Plan
21
This infographic covers the implementation plan that will be considered within the organization to evaluate the best fixed capital of the company.
01
Inventory
Inventory, cataloging
and mapping of the
existing assets
Condition
Assessment
Age, location, risk, and
current condition of the
assets are evaluated
02
Maintenance
Maintenance plan is
established to validate the
repairs and associated costs.
03
Lifecycle
Costs
Asset utilization is improved
over time
04
Level
of Service
Current and proposed level
of services are evaluated,
and gap is identified
05
Consequence
of Failure
Failure’s impact is identified
on the asset, consumer
and system
06
Optimizing Operations
& Maintenance
and Capital
Improvement Plan
Technology data is gathered
and analyzed to ease the
management process
07
Funding
Strategy
Long term system budgeting
will determine the
asset’s priority
08
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22. 22
07Impact of Fixed
Capital Evaluation

23. Impact of Fixed Capital Evaluation
23
This slide evaluates the best technique which our company will consider to evaluate the organization’s fixed capital.
14%
21%
41%
48%
94%
Your text here
Your Text here
Less people are required to
manage assets
Saves time and money
Depreciation is managed
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24. 24
08Fixed Asset
Management Software

25. Fixed Asset Management Software
25
This slide focuses on the sources of fixed capital such as owner’s own resources, issue of shares, issue of right shares, private placement of shares, issue of debentures, term loans,
retained earnings, lease financing, etc.
FleetSmith
$18.25 per
month, per
user
• Zero-touch deployment
• Automatic configuration
• Inventory management
• Your text here
• Your text here
• Your text here
UpKeep
$35 per
month,
per user
• Reduce downtime
• Cloud technology
• Team management
• Your text here
• Your text here
• Your text here
Sage FAS
$25 per
month,
per user
• Project Snapshot
• Numerous
depreciation methods
• Custom fields
• Your text here
• Your text here
• Your text here
IBM Maximo
$45 per
month,
per user
• Intelligent scheduling
• Asset health visibility
• Flexible deployment
• Your text here
• Your text here
• Your text here
F
E
AT
U
R
E
S
P R I C E
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26. 26
09
Fixed Asset Dashboard

27. Fixed Asset Dashboard 1/2
27
This slide focuses on the sources of fixed capital such as owner’s own resources, issue of shares, issue of right shares, private placement of shares, issue of debentures, term loans,
retained earnings, lease financing, etc.
$42550
$100000
$120000
$16500
$24000
$65000
$4500
$4800
$27000 $3000
Big Automobile
Building 1
Building 2
Cool Truck
Duplicator
Fancy Automobile
Laser Printer
Office Desk
Processing Machine
Table 2*6
$107550
$220000
$8100
$52200
$11750
$16500
Auto
BLDG
COMP
EQPT
FURN
LTRK
$26239
$95556
$120000
$16500
$24000
$65000
$4500
$4800
$27000 $3000
Big Automobile
Building 1
Building 2
Cool Truck
Duplicator
Fancy Automobile
Laser Printer
Office Desk
Processing Machine
Table 2*6
$76073
$210222
$6255
$45354
$10515
$25635
Auto
BLDG
COMP
EQPT
FURN
LTRK
Top 10 Fixed assets by Original Cost
Original Cost Value by Class
Top 10 Fixed assets by Book Value
Fixed Asset Value by Class
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28. Fixed Asset Dashboard 2/2
28
This slide focuses on the sources of fixed capital such as owner’s own resources, issue of shares, issue of right shares, private placement of shares, issue of debentures, term loans,
retained earnings, lease financing, etc.
Your text here
Computer Equipment
Equipment
Furniture & Fixtures
Your text Here
Vehicles
2%
52%
3%
8%
1%
34%
Fixed Asset Value
by Category
Number of Fixed assets
Value of Fixed assets
NAV: Net Asset Value
Purchases in Fiscal year
66
$108,658
$78,259
$8,658
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29. Icons Slide for Fixed Capital Evaluation to Improve Business Growth
29

30. 30
Additional
Slides

31. Bar Graph
31
This graph/chart is linked to excel, and changes automatically based
on data. Just left click on it and select “Edit Data.”
Product 03
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on data. Just left click on it and select “Edit Data.”
Product 02
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Product 01
25
45
50
60
40
36
43
50
45
48
58
65
0 50 100 150 200
Q1
Q2
Q3
Q4
Sales in Percentage(%) 2020

32. Our Mission
32
Our Vision
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33. About Us
33
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Value Clients
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Target Audiences
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Preferred by Many

34. Meet Our Team
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Designation
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35. Financial
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Minimum
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35%
Medium
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65%
Maximum
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78%

36. Timeline
36
Start Finish
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37. Circular Diagram
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38. Idea Generation
38
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IDEA

39. Post it Notes
39
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40. Monthly Timeline with Task Name
40
Sample
Text
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41. 30 60 90 Days Plan
41
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42. Comparison
42
70%
Male Users
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80%
Female Users
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43. Roadmap
43
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44. Thanks for Watching!
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