Financial tests, such as the Debt Service Coverage Ratio (DSCR) test not only is used within credit documentation as a warning mechanism to determine and monitor the project performance and the likelihood for debt repayment. It also is a key metric in order to control and restrict dividends and other distributions to project sponsors. Further, […]
The general structure of our project finance model is illustrated in the diagram below: One of the essential elements of our project finance model is that different calculations are made for distinct phases of the respective project – the development phase, the construction phase and the operation phase together. The sources and uses statement is […]
Financial models are the most integral part of any infrastructure finance transaction. For example, in many infrastructure transactions, the maximum debt amounts will be subject to adjustments which reflect the final sizing of a borrower’s debt requirements on the basis of a final financial model run reflecting updates of the underling base rate setting. As […]
The cash flow from infrastructure investments often exceeds the accounting profit of the company. This is principally because infrastructure assets typically have high depreciation charges (due to high upfront capital expenditure requirements) but relatively low ongoing capital expenditure requirements. Since dividends on ordinary shares can only be paid out of retained profits, this creates a […]
In project finance, the cash flow cascade regularly is the key basis and determinant for making business decisions. Whilst split in a similar fashion as in typical corporate financial reporting, a much stronger emphasis is put on the financing aspects. The cash flow waterfall usually contains many sub-totals, each of which steering different claims on […]
In corporate financial reporting, the cash flow statement is usually derived from the Profit and Loss and Balance Sheet (through adaptions) and typically split into Cash flow from operations (CFO), Cash flow from investing (CFI) and Cash flow from financing (CFF) as generically presented below. Cash Flow Statement