Annex XI. Guidelines for evaluation of the economic viability of the beneficiary

Applicants should demonstrate in the improvement plan economic viability of the project and the fact that he/she could service its debt obligations regularly without putting at risk the normal operation of the holding (enterprise) at the end of the project realization. The following criteria will be used in determining the level of economic viability:

·        financial leverage ratios (debt – equity ratio, total debt ratios);

·        liquidity ratios (the solvency over short term liabilities (current ratio), acid test (quick) ratio);

·        interest coverage ratio;

·        profitability ratios (gross profit margin, operating profit margin, net profit margin, average invested capital return, average asset return);   

·        asset utilization ratios;

·        project’s internal rate of return (IRR) must exceed the cost of borrowed capital;