Based On System Dynamics Of The Iron And Steel Enterprise Reconstruction Project Economic Evaluation

In recent years, economic environment of the world, both China and other foreign countries, has a huge impact on the operations of the steel production of industrial enterprises, which has resulted in the unrest of the iron and steel industry. Therefore, the quantity of the global crude steel production has been high or low sometimes from2008to2011.And profits and losses of Iron and steel enterprises has been in the ups and downs of the state accordingly. As a result, there are some small and medium enterprises to be loss of discontinued occasionally, with their backward process and high energy consumption. That’s the reason why all the country of the world have introduced policies of iron and steel enterprises to merge and reorganize the technical transformation expansion, and various companies have responded positively to the policies. This paper is discussing that is whether or not to worth to the invest for the technological transformation of the expansion, when Iron and steel enterprises has merged and reorganized.The feasibility analysis of Iron and steel enterprises’s expansion project is to study that the required technology is whether to have, and what is the financial differences between convertion and non-convertion. At last, it is to decide whether to invest in renovation and expansion by the conclusions of above-mentioned. It’s needed to assess the inputs and outputs of a variety of financial data, technical solutions from site selection, process equipment selection, and so in-depth study on the basis of the project.This paper is based on the corporate financial perspective to study how to evaluate the renovation and expansion of the iron and steel enterprise in its economic. Firstly, the paper discusses the respective evaluation methods and evaluation both of new projects and expansion projects.For expansion projects, it selects "yes" and "no " project incremental method thought to analyze the incremental net cash flow. Then to calculat static and dynamic incremental indicators to evaluate the financial differences between convertion and non-convertion of the renovation and expansion, based on the result of the analysis.At last, to compare which project is better between convertion and non-convertion.All of these,it’s to provide a reference to whether to invest the company to renovation and expansion.The purpose is to avoid investment mistakes and reduce the investment risk.The paper construct a model on economic evaluation for the expansion project, which reflect the change the dynamic causal relationship between various factors on the expansion project financial, to some extent.After the model’s construction, the application of C Steel Corporation renovation projects incremental financial data simulation. With Vensim software to run the model obtained forecast data, analysis of the incremental profitability of the steel expansion project, renovation and expansion, convertion,rather than non-convertion has advantage, with analyzing the financial profitability indicators obtained to support the renovation and expansion the conclusions of the investment decision-making.