Why Are These Opportunities Analyzed So Extensively?

Investment decisions should be analyzed carefully because such analysis is of assistance in the decision-making process and because the decisions are irreversible, have long-term strategic implications, are uncertain, and involve considerable financial exposure.

Assistance

Forecasting the future performance of a proposed investment requires the analyst to identify all the issues and effects, both positive and negative, associated with the investment. While this does not eliminate risk, it does lead to a more intelligent, better-informed decision-making process. Facts and expectations based upon research and strategic thinking are incorporated into the forecast. The results of the financial analysis do not make the decision. People make decisions based upon the best available information. A capital expenditure requires significant funds and corporate commitment. It is vital that these decisions be well informed.