Financial Benefits Example

Financial Benefits Example

Problem Statement

Use the Benefits Report to document the benefits for the following project. The current delivery performance for your company is 92% and according to the SLA it has to be 95%. Your customer has threatned that unless the performance is improved he will take his business elsewhere. Currently, the revenue provided by this company is $1,000,000. The gross margin for this business is 32%.

How to perform analysis

Step 1: Open Sigma Magic
  1. Click on the Sigma Magic button on the Excel toolbar.
  2. Click on the New button to create a new project.
Step 2: Add the analysis template
  1. Click on the Tool Wizard to add the analysis template.
  2. Click on Project and then Financial Benefits.


Step 3: Specify analysis options
A new worksheet will be added to your workbook. Analysis Setup will be automatically opened, in the setup tab specify the following details.



Step 4: Enter the Worksheet data
Click on Create button to save all changes in the analysis.On the worksheet, enter the following details. A sample worksheet is given below:



Step 5: Generate analysis results
Finally, click on Verify tab to ensure all the inputs are okay and shown in a green checkmark.



Click Ok to close the dialog box.

Interpretating Results

  1. ​The project increased revenue by $50,000 plus potential cannibalization of other products.
  2. This would indicate successful project development that has brought additional income
  3. A gross margin of 32% would mean the percentage of the income going to profits after making expenses for actual production costs.
  4. More margin means better profitability.
  5. Net income rose by $11,000 working off revenue increases and decreased costs.
  6. This means that after all relevant costs, the project positively contributed to the bottom line.
  7. Assets increased by $20,000, which implies that cash flow, accounts receivable, or inventory grew.
  8. No liabilities were reported, meaning no additional debt was incurred.
  9. The net impact on the balance sheet is $20,000, which means a stronger financial position.
  10. This report has presented a very healthy financial performance of the project in terms of revenue, net income, cost avoidance, and capacity utilization.
  11. Additional liabilities have not been reported; hence, it strengthens the company's financial health.
  12. The initiative is demonstrating proper financial management, strategic planning, and operational efficiency.​

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