What is the Loan Life Coverage Ratio (LLCR)? The Loan Life Coverage Ratio (LLCR) is a metric used to gauge the ability of a project to completely cover its debt obligations. The LLCR is a very commonly used ratio to assess the potential risks of projects in project finance. This coverage ratio can be taken…
What is the Debt Service Reserve Account (DSRA)? The Debt Service Reserve Account (DSRA), which is a component of a debt service fund, is a reserve account used to pay interest and principal amounts of debt. The DSRA is very important when the cash flow available for debt services (CFADS) is below the necessary amount…
What is Cash Flow Available For Debt Service (CFADS)? Cash Flow Available for Debt Service (CFADS), also commonly referred to as cash available for debt service (CADS), is the amount of cash available to service debt obligations. It takes into account several cash inflows and outflows to give an accurate representation of a project’s ability…
How are Oil and Gas Company Balance Sheets Different? The oil and gas industry is vast and contributes to a significant portion of the world’s energy consumption. Like many other industries, oil and gas companies own specific line items unique to them. Here, we look at unique line items on oil and gas company balance…
What is Conventional Cash Flow? Conventional cash flow is a series of cash flows which, over time, go in one direction. It means that if the initial transaction is an outflow, then it will be followed by successive periods of inward cash flows. Although rare, conventional cash flow can also mean that if the first…
What is Timing of Synergies? When a company is looking to enter into a merger & acquisition deal, the timing of synergies is of extreme importance. It is because M&A deals are essentially time-sensitive because of the volatile nature of financial markets. The market constantly goes through periods of expansion and recession, characterized by economic…
What is P/FFO? P/FFO, or Price to Funds From Operations, can be described as a reliable and modern way of determining the value of a Real Estate Investment Trust (REIT). The P/FFO metric is calculated by adding amortization and depreciation to the net income and then deducting the gains on the sale of properties. Unlike…
Income vs Revenue vs Earnings Income, revenue, and earnings are probably the three most widely used concepts in accounting and finance. All the terms denote measures of a company’s profitability. Although they are defined differently, they are frequently confused with one another. Income (net income) is the amount of money a company retains after subtracting all…
What is Earnings Before Tax (EBT) vs Pretax Income? Actually, there is no difference between earnings before tax (EBT) vs pretax income. Both terms denote the same concept and can be used interchangeably. Essentially, EBT or pretax income is a measure of the company’s profitability. EBT indicates the amount of money that a company retains…
What are Intersegment Sales? Intersegment sales refer to revenue generated by means of a transaction between segments within the same business. It is generally the case with large conglomerates that engage in several lines of business. Such companies manage segments that have interconnect operations either vertically or horizontally. Companies are required to disclose all intersegment…
