Financial Appraisal of Wine Producing Private Firm Abkhazian Drinks and Co. in Abkhazia

The Financial analysis is a process of evaluating projects, businesses, budgets etc. to determine their suitability for investment. Financial Analysis helps to determine whether the project is financially viable or sustainable. There are several reasons to conduct financial analysis. One of the reasons chosen to conduct this research study is to evaluate the risk of an investment or determine if a firm has the ability to repay a loan, since when people and lending institutions are putting capital at risk they need to be able to determine the level of risk and probability of return of their actions. The study was also done in order to assess the viability of the project, with the help of analysis to figure out whether the project is the “good” project, identify whether investment in this project will make the equity holders better off, and increase their wealth. The aim of the company is to deliver the wines to the market, distribute the wines to the hotels, restaurants, bars and etc. The sales are done according to the contractual arrangements, offering the potential buyers discounts, assuring the stable demand and stable revenues. The two-way and one-way sensitivity analyses were conducted to identify the impact of the risky variables on the model’s outcomes. The results obtained conclude that no matter how those variables vary during the experiment, the project’s outcome seems to be not sensitive to risky parameters, due to the contracts arranged. The overall conclusion is that the model is viable and feasible, resulting in high NPV and high debt service ratios. From the both perspectives – the owner’s and the overall investment perspective the project is bankable, feasible, and a perfect one, worth investing in.