Blog

By Anna Kim on June 3 2009 | No comments Our increasing exposure to the Korean market has made me think about how a corporate culture can encourage or discourage certain aspects of Best Practice Modelling. A recent assignment gave me the opportunity to work closely with a client in Seoul. Whilst there I was able to experience first hand the corporate culture and how certain aspects could adversely affect the standard of financial modelling. Certain aspects such as peer review can be regarded as a lack of trust. Challenges like this regardless of country the team and/or company culture can have a big impact on the promotion of new concepts, such as good modelling and quality control. So how can a good team culture improve good financial modelling? Well there are a few angles worth exploring... Read more

By Nick Crawley on May 28 2009 | No comments I recently had an interesting discussion on my earlier article on how a little more science could make the DSCR a more powerful metric. In summary two project finance professionals debated if running scenario analysis isn’t more meaningful. My comment to this is below and I think articulates my earlier point a little better by putting the ‘variance’ of the DSCR out there as a measure of the ‘base case’ rather than of the sensitivity of the model to movements in underlying assumptions.... Read more

By Nick Crawley on May 21 2009 | No comments A big part of my professional life has been spent calculated a very simple ratio, the Debt Service Cover Ratio (the “DSCR”) and I don’t think it could get much easier! Assuming that you are happy calculating this ratio and you understand its importance in the project finance world then how about we step it up a gear? Due to my mathematical grounding before switching to the dark side of the world of finance I am probably biased when I say so much more can be done with this ratio rather than just... Read more

By Anna Kim on May 7 2009 | No comments Have you ever found yourself building your financial model when your coding of a flexible target for the debt service reserve account (”DSRA”) causes a circular reference? If yes, well welcome to the world of project finance modelling and don’t worry, it is not unusual and you are not the only one at this very minute having the same issue! This situation, in many instances is due to a simple coding error and I would refer you to our tutorial but often, especially if you are repaying debt via a cash sweep mechanism the logic is indeed circular. Further more this is probably because of the interest earned on the DSRA/c balance causing an issue with tax payments.... Read more