Return on Investment (ROI) Analysis for Manufacturing

Name: Return on Investment (ROI) Analysis for Manufacturing
Rating: 4.7 (524 reviews)

Revenues, depreciation, cost of capital, inventory ... How to know if a major investment is right for your organization

Highest Rated

Created byRay Harkins, The Manufacturing Academy

Last updated 6/2026

English

Arabic [Auto],English [Auto],

What you'll learn

Capital investment justification (equipment, new processes, building, etc.)
Accounting principles such as balance sheets, COGS, accounts payable, accounts receivable, and gross margin.
Net Present Value (NPV), Cost of Capital and the Time value of money
Free Excel templates to build your own capital justification model
Net Working Capital and the typical business cycle.
Financial modeling and analysis

Course content

1 section • 27 lectures • 2h 18m total length

Introduction6:47
Introduce the net present value method for manufacturing ROI, detailing key inputs like depreciation, working capital, inventory, and salvage value, and using Excel templates to empower engineers moving into management.
Initial Investments5:53
Understanding the financial aspect of an initial project investment including the purchased equipment, installation, training, etc.
Initial Investments in the Model3:33
Starting the ROI model, and building into that model the initial investments.
Initial Investment
Salvage Value Overview4:52
The value of the capital investment at the end of its useful life.
Salvage Value in the Model1:40
Building that value into the ROI model.
Salvage Value
Sales Revenue5:13
Projecting sales revenues for a multi-year project.
Sales Revenue in the Model3:18
Building Sales Revenues into the model.
Sales Revenue
Direct Costs4:59
The direct labor and material costs required to manufacture the product.
Direct Costs in the Model4:22
Accurately modeling direct costs.
Direct Costs
Manufacturing Overhead4:01
The indirect costs required to manufacture a product. What they are and how to estimate them for a multi-year project.
Depreciation4:52
The planned, gradual reduction in the recorded value of an asset over its useful life by charging it as an operating expense.
Depreciation
Electrical Usage3:59
A comparison of consumption versus demand charges.
Overhead in the Model4:12
Accurately building these overhead expenses into the ROI model.
Gross Margin3:32
Operational profit: How to calculate it and why it's important.
Gross Margin
Cash Flows3:05
The bottom line cash flows in a multi-year project
Change in Net Working capital11:03
The financial assets required to support the project
Net Working Capital Requirements6:05
The financial assets required to support the project year over year
Working Capital
Summarizing Annual Cash Flows2:40
The projected annual cash flows from the project.
Cost of Capital12:43
The value of cash for a given organization. WACC versus Hurdle Rate.
Cost of Capital
Discounting Future Cash Flows5:43
The present values of future cash flows.
Project NPV5:56
Summarizing the value of a proposed project in today's money.
Interpretation of Results6:51
Understanding your project's NPV.
UPDATE: Introduction to Profitability Index2:01
COURSE UPDATE: Use NPV to calculate a more layer of analysis to find a project's Profitability Index.
UPDATE: Profitability Index Explained8:52
Profitability Index explanation and application.
Compounded Annual Growth Rate (CAGR)5:11
An easy-to-use tool for comparing investments with different time horizons.
Conclusion0:51
Conclusion
Bonus Lecture6:10

Requirements

Fundamental knowledge of manufacturing
Basic Excel skills
Basic math skills

Description

Return on Investment (ROI) Analysis for Manufacturing teaches the tools, models and concepts manufacturing professionals need to determine if a significant investment like a new piece of equipment will be financially beneficial to their organization.

This course teaches the basics of ROI analysis such as estimating revenues, on-going expenses, and the initial investment. It also explores more advanced aspects of capital investment justification such as adjusting for risk, changes to net working capital, and estimating overhead.

It then shows the student how to assemble these projected expenses and revenues into a financial model designed to return the Net Present Value (NPV) of the project. NPV is the method experts agree is the best for evaluating capital investments.

If you are eager to add business finance and financial modeling to your skill set, then this is the class for you!

If you are looking to merge your project engineering skills with the real world of business finance, or move from an engineering role to a managerial one, then this course is for you!

If you are looking for a clear and straight-forward explanation of the sometimes confusing world of business finance, then sign up today!

"It is comprehensive and straightforward instruction with practical examples." - Ben P.

Who this course is for:

Manufacturing Engineers, Project Engineers, Industrial Engineers, Process Engineers, Production Managers
Operations Managers, Plant Managers, Engineering Managers, Continuous Improvement Professionals
Capital Project Analysts, Maintenance Managers, Business Analysts in manufacturing
Finance Professionals supporting operations, Aspiring Manufacturing Executives, Anyone interested in financial modelling