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	Table of Contents
p. 61 of 203 BACK | NEXT Foreword 1. Introduction to the Guidelines 2. User Instructions 3. Preparing and Appraising Investment Project 4. Financial Management of Executing Agencies 4.1. Financial Management Overview 4.2. Institutions and Systems 4.3. Financial Analysis 4.3.1. Introduction to Financial Analysis 4.3.2. Financial Analysis Objectives 4.3.3. Linkages with Cost Recovery and Tariffs 4.3.4. Preparing Financial Tables 4.3.5. Determining Fiscal Period Coverage 4.3.6. Forecasting and Financial Projections 4.3.7. Forecasting Assumptions 4.4. Measuring Performance 5. Reporting and Auditing 6. Financial Institutions 7. Knowledge Management

Financial Management and Analysis of Projects : 4. Financial Management of Executing Agencies

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4.3. Financial Analysis

4.3.1. Introduction to Financial Analysis

4.3.1.1. This Financial Analysis section contains methods of preparing and assembling data for financial analysis. The analysis is to provide a quantitative and qualitative examination of the financial operations of revenue-earning and nonrevenue-earning projects in the public and private sector and, where appropriate, EAs. (It may be noted that for nonrevenue-earning agencies, an analysis of the EA is rarely required.)

4.3.1.2. This quantitative and qualitative examination is designed to: (i) assess the financial viability of a proposed investment in a project; (ii) assess the financial viability of a project, including during implementation, at commissioning, and after completion; (iii) illustrate the financial structure of an EA, and its existing and potential financial viability, including the financial efficiency and effectiveness of its operations with and without the project; (iv) assess the adequacy of the financing plan for the project; and (v) advise on methods of improving the financial viability and efficiency of an EA, including the appropriateness of tariffs, prices and cost recovery generally, and on the financial arrangements, conditions, or loan covenants which should be required as conditions of ADB financing, and the extent of a borrower's compliance therewith.

4.3.1.3. This section illustrates, in particular, approaches to the analysis of revenue-earning projects and EAs because these are the most complex forms of analysis likely to be required. The illustrations of sound financial management and analytical practices herein should be modified to meet the requirements of each project. They are neither intended to substitute for the financial analyst's judgment as to the best method of presentation in each case, nor to define precise financial measurement criteria for a project or, where applicable, an EA.

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