The RTAF financial feasibility analysis approach utilized by the INVIZEN RTAF program model focuses on the production of a pro forma financial presentation, the key empirical assumptions of which, are sourced from the market feasibility analysis portion (the “front-end” of the RTAF report) of the report, so as to attempt to mimic market considerations to the greatest degree possible. The INVIZEN approach is predicated upon the idea that the geographical primary marketing area within which the anticipated project is expected to operate, demonstrates consumer/end-user purchasing preferences that can be amalgamated into the “Ideal Development Profile” that becomes the standard for the development of the future project design, construction, marketing and ongoing operations, as the closer the future project business is to meeting consumer/end-user purchasing preferences, the more likely the project business would be to have a successful launch and stabilization, all other things being equal – whether this is the case in fact or not. To the extent the actual development operations deviate from the Ideal Development Profile, the risk of a launch or sustainable penetration rate failure would be reasonably expected to increase as well.
The production of the pro forma financial presentation used in the RTAF relies upon the proprietary ScenarioBuilder technology contained within the ProFormaPro modeling program spreadsheets that provide a month-by-month, line item by line item accounting of all revenue and expense components that can be reasonably identified and quantified by the INVIZEN market survey of data sets. These include the creation of the resulting main FASB schedules on a month-by-month basis for an assumed 10-year holding period, as well as annual consolidated reporting for all schedules as well. Notes, assumptions and the basis of calculations are available upon request to INVIZEN by the customer.
The INVIZEN RTAF model focuses on the goal of solving for the requirement for the contribution of working capital to the proposed project, as working capital is the key to future operating success at the critical launch stage. In this regard, accrual accounting is limited to appropriate balance sheet items, while calculations made on the remaining component statements are based upon a cash accounting approach in order to have maximum sensitivity to the requirement for the contribution of working capital. Accordingly, once the hard costs of construction, soft costs of construction, finance and carrying costs and related items are determined via capital market investment preferences and local market data, the remaining item requirement is working capital. Once this item is projected, the resulting internal rate of return on the sponsor’s theoretical at-risk capital investment is computed and compared to the sponsor’s minimum investment return threshold requirement and where this is exceeded the resulting RTAF study is considered acceptable.
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