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Energy Revenue Forecasting Using Renewable Modelling

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Revenue and cash flow forecasting based on renewable modelling is essential in terms of reviewing the financial feasibility of clean energy projects. Since renewable energy projects have a tendency of having a large initial capital investment and long operations, there should be proper forecasting of the revenue and cash flow. Renewable modelling that is applied in revenue and cash flow forecasting converts future energy generation into future sources of income, enabling investors and project sponsors to know when and how the cash will be collected. In real life implementation renewable modelling used in revenue and cash flow forecasting makes use of assumptions addressed to electricity generation, tariff structure, power purchase arrangement and operating expenses. The forecasts assist in deciding whether a project is viable to cover its debt and provide reasonable returns to the equity investors. Consequently, the renewable energy financial analysis relies on the revenue and cash fl...
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Financial Reporting Standards Guide to Lease Classification

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The classification of lease in financial accounting is the procedure of identifying how a lease set up ought to be acknowledged and recorded in the record. This classification has an impact on the manner, in which assets, liabilities, expenses, and cash flows are presented, hence it is a very important area of financial reporting. The classification of lease in financial accounting assists financial statements users in realizing whether or not a lease conveys substantial economic advantages and risks to the lessee or whether it is simply a rental agreement. Riverstone Training reiterates that proper classification of leases is necessary to achieve transparency, compliance, as well as comparability in financial reporting. Practically, the lease classification, as described in financial accounting, would have an impact on the balance sheet and income statement. A put down the wrong lease will be flipped, leverage ratios, measures of profitability, and measures of the utilization of the ...
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Statistical Decision Making in Finance: The Role of the Coefficient of Variation

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The use of coefficient of variation in interpreting results to make a decision is vital in the comparative study of the relative risk or consistency of various data sets. The difference in the coefficient of variation indicates variability in terms of the mean and this enables the decision-makers to interpret the variability in terms of its proportion to average performance. Riverstone Training stresses the interpretation of result of coefficient of variation to aid in decision making, assists managers, analysts and investors to assess uncertainty in a more objective way, where absolute values may be misleading themselves. Practically, the effects of interpretation of coefficient of variation results in decision making enable organizations to make comparisons of options of various magnitudes, including investment returns, or cost structures, or operational performance measures. A smaller coefficient of variation normally represents a more stable result whereas a larger coefficient sig...
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Managerial Accounting Guide: Contribution Margin Explained

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The basic question in managerial accounting and financial management is what is contribution margin and why it is relevant in making business decisions. Contribution margin is the amount of sales revenue that is left after deducting variable costs and this amount helps in the covering of the fixed costs and profit generation. Knowing what contribution margin is and why it is important in business decisions would enable managers to have a clear picture of the impact of sales volume and cost structure on the overall profitability. Riverstone Training points out that contribution margin is a convenient tool of assessing short term decisions like pricing, mix of products and capacity utilization. The question of contribution margin and its importance in business decision-making is of particular importance in business when managers have a trade-off to make. As an illustration, contribution margin when making a decision on accepting a special order that is priced lower will allow one to det...
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Financial Statement Analysis Guide: Horizontal and Vertical Approaches

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Financial analysis technique is vertical analysis of the balance sheet as a percentage of total assets, which converts every balance sheet item into percentage of total assets. This process enables analysts to comprehend the arrangement of the financial position of a company in the sense that it indicates how the assets are financed and distributed. Riverstone Training says that vertical analysis of balance sheet as a percentage of total assets facilitates the standardization of the financial statements, thus it is easy to compare companies of various sizes or to compare the changes in the same company across time. In practice, a vertical balance sheet analysis as the percentage of the total assets allows noting the dependence of the company on the debt or equity financing and the efficiency of the allocation of the resources. As an illustration, a high ratio of current assets can be used to suggest high levels of liquidity and large percentage of fixed assets can be used to suggest c...
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