VMS Economic & Financial Analysis Services

Economic & Financial Analysis

Should business operations be continued, expanded, or dropped? Should certain materials and facilities be procured? Should debt or equity issuance be the primary mode of capitalization? Should equipment be leased or purchased? Our clients realize success because VMS focuses on answering the tough financial questions that clients want to know.

VMS offers a wide array of economic and financial analysis services that cater to the necessity of making informed decisions. VMS strategic economic and financial analysis services provide a holistic picture to leaders and decisions makers by informing them of key data and information that drive the markets. Primary services include:

  • Economic impact studies in order to assess job creation, economic output, and economic value added
  • Market analysis for the evaluation of both market capacity, as well as elasticity in the establishment of a market profile
  • Demand-based market labor and wage analysis
  • Forecasting of supply/demand and commodity prices relative to market trade flows
  • Benefit Cost Analysis (BCA) for all types of infrastructure investment, including transportation, transit, water/wastewater, and energy
  • Project economic evaluation using discounted cash flows in order to assess net present value, rate of return, and strategic investment allocation
  • Decision analysis in path selection and horizon planning
  • Linear and non-linear optimization of projects, processes, and systems in manufacturing, supply chain, corporate and industrial applications
  • Performance based fundamental financial evaluation focusing on both debt and equity scenarios
  • Bonding capacity and optimal market yield assessment
  • Demand and operationally driven financial rate analysis in water/wastewater applications
  • Corporate after-tax discounted cash flow evaluation for projects and enterprises in industrial and investment arenas;
  • Uncertainty and sensitivity analysis;
  • Strategic assessment of operations and financial viability

In a competitive world where information and market-based knowledge helps propagate success, VMS economic and financial analysis services are sure to be able to support that mission. Each of these unique types of analysis can enhance the information available in making key decisions for strategically guiding an organization towards positive outcomes.

Financial Analysis

VMS enables clients to understand their financial position by assessing the viability, stability, and profitability of businesses, entities, or projects and programs. Decision makers can utilize the thorough Financial Analysis VMS offers as a platform for strategic planning and decision making through detailed analysis of the past, present and future and key financial performance metrics. Ultimately, informed decisions based on the proper analysis leads to enhanced strategic performance of a business. This is exactly what VMS delivers.

When conducting Financial Analysis, we observe four core interrelated areas: Profitability, Solvency, Liquidity, and Stability. Profitability is the hallmark of success and a business or a project’s ability to earn income and sustain growth over shorter and longer term horizons will ultimately drive sustainable success. Operational efficiency goes hand in hand with solvency; therefore, it is also important that a business or operation maintain an ability to pay obligations to creditors and other third parties for the foreseeable future. Without liquidity, a business or operation will not have sufficient positive cash flow to result in the satisfying of immediate obligations. Over the longer term without profitability, solvency, and liquidity there can be no enduring operational stability to protect against significant losses in the conducting of everyday business.

Overall, VMS provides the thorough analysis of each of these four core components of running a financially successful and sustainable business such that key decisions for enduring viability and strategic execution are ensured.

Our clients realize success because VMS focuses on answering the tough financial questions that clients want to know. Should business operations be continued, expanded, or dropped? Should certain materials and facilities be procured? Should debt or equity issuance be the primary mode of capitalization? Should equipment be leased or purchased? Through careful analysis and understanding of our client’s businesses and operations, VMS can perform detailed investigation for support of all decisions requiring the deployment of capital.

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Cost-Benefit Analysis

VMS assists clients in appraising and evaluating decisions, project selection, and planned investments within the structure of economic Cost-Benefit Analysis. Weighing total expected costs and the resulting benefits derived during this type of analysis helps decision makers determine whether or not projects, programs, or investments have merit. When faced with multiple alternatives, it is important to not only understand the relative cost effectiveness of each scenario, but also to gauge the relative efficiency of such planned actions. VMS provides clients with valuable information that relates the flows of project costs and resulting streams of benefits such that clients can clearly understand and act on.

Using our extensive professional experience and facilitation techniques, VMS provides clients with an understanding of the cost structures, as well as the nature and impact of the resulting benefits in a manner where stakeholders can reach consensus on the intricacies and impacts of such costs and benefits. Combining our unique Cost-Benefit Analysis model structure and logic approach with our expertise in risk and uncertainty modeling, VMS uses the comparison of mutually exclusive alternatives based on the identified key evaluation metrics to make clear recommendations for action. Ultimately, clients receive value from VMS’ Cost-Benefit Analysis approach through the resulting detailed statistics, clear comparison of evaluation criteria, and resulting recommendations in which decision makers can have the utmost confidence.

No matter what stage of the decision making process, VMS provides analysis and projection of outcomes that enhances clarity and confidence in support of effective decision making.

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Capital Allocation Planning

Capital allocation and budgeting decisions are some of the biggest challenges in planning. When multiple stakeholders are involved in the decision making process, competing objectives can make it difficult to reach consensus. With the understanding that such decisions have a significant and lasting impact over many years of a project or program, VMS provides clients with innovative solutions to avoid such difficulties and to be able to transparently make capital allocation and planning decisions.

By utilizing both a quantitative and qualitative decision making process, VMS helps clients make decisions and allocate capital. The methodology employed prioritizes proposed projects and programs based on their relative importance towards achieving organizational goals and objectives. This is accomplished by identifying and prioritizing a set of decision criteria and sub-criteria, defining rating scales, and then rating the various alternatives using the decision criteria to determine a weighted outcome. The outcome is the measure of relative importance of each potential alternative as an input to the capital planning and budgeting process. VMS uses this innovative approach of resource allocation and optimization to support more informed allocation decisions given a broad range of budgetary constraints.

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Economic Impact Analysis

Understanding the economic impacts of capital investment and deployment is no small task. But with the emphasis of infrastructure and development programs shifting to stimulating local and regional economies, it has become increasingly important to be able to directly relate how economies are being affected by projects and programs in their area. Fortunately, VMS has the tools and professional experience to provide clear, concise, and transparent analysis that can address these needs. We help clients analyze and project the impacts to regional economies of their planned capital expenditures by analyzing forecast changes in variables such as job creation, wages, tax revenue generation, net value added, and total economic output.

VMS utilizes economic input-output modeling to help decision makers determine the effects of policies, projects, programs, or other activities affecting an economy. A comparative analysis of the base case versus the planned scenario is analyzed in order to project the net difference that would occur by accounting for industrial expenditures patterns and trade flows throughout a regional economy. The analysis produces alternatives, and those that provide the most regional benefit can then be translated into actionable results for decision making.

When deploying capital or looking to understand the effects of past expenditures, it is important to know where value lies and how to extract the most value per dollar expended. From developing grant applications to reinforcing public infrastructure expenditures, VMS helps clients to clearly understand where the value per dollar of expenditures can be optimized and the resulting economic impacts.

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Rate Structuring Analysis

VMS can help in the establishment of a realistic and fundamentally grounded rate structure that is comprehensive, while also both fair and equitable. In the establishment of equitable rates, it is important to consider rate sufficiency such that revenues support operations while maintaining and developing capital infrastructure and stability of the utility.

VMS also ensures that there is equity among users by allocating costs among users proportionate to the level of service demanded and the costs to provide that service. In addition, stability of rates is considered such that the rate structure is derived from sound financial analysis that effectively forecasts system revenues and expenses that buffer rate fluctuation and variability. Through the act of sound financial planning and in-depth sensitivity analysis, the controlling variables are highlighted in order for reliable decisions to be made based on factual data and uncertainties that may influence rates.

We take an approach that ensures ease of implementation and simplicity of rates such that any user can understand the basis for the calculation of established rates. This helps to ensure that business is retained by setting commercial and industrial rates at a level where general user rates are not a disincentive for business and recognize the tax benefits of commercial utility users. Overall, using this level of comprehensive analysis can help ensure that the optimal rate is identified and can feasibly be implemented at the best value for both the utility and its customers alike.

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Discounted Cash Flow Modeling

More to come.

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