Feasibility analysis of entrepreneurship from the perspective of financial management: a study on Chinese university students

Abstract

The theory and practice of feasibility study of industrial projects originates from the development of the Tennessee River basin in the USA in the 1930s. It is a scientific analysis method that conducts investigation and study of new industrial project’s technology advantage, economical rational as well as the implementation feasibility in order to achieve maximum returns of the investment. The traditional Chinese medicine project has the characteristics of large investment, long cycle and high cost of capital. Due to the irreversibility of construction investment, once the project is implemented, most investments will become sunk cost. This paper takes the project “eaves outside bamboo and Chinese medicine in garden” as an example, focusing on the feasibility analysis of entrepreneurship projects in the business plan from the perspective of financial management. The project is a 5-year traditional Chinese medicine electronic commerce project, focusing on providing healthcare services and disseminating Chinese medical culture. The economic evaluation of investment projects is mainly based on dynamic indexes, while static indexes only play a supporting role. The net present value indexes coincide with the goal of pursuit maximizing enterprise value. The internal rate of return is the rate of return that an investment is expected to achieve. Investors are more willing to adopt the net present value as the evaluation index of decision making. Study found feasibility analysis can improve the scientific and democratic decision making of investment projects on the one hand, and reduce the waste and loss caused by decision-making errors on the other hand. For independent project, the final conclusions were consistent through NPV, IRR, payback period and the investment effect coefficient.