1. The heart of all project finance models
T201 Project Finance Modelling
Cash Flow Waterfall
The heart of all project finance models
Hello, my name is John Richter; I'm one of the instructors here at Financial Mechanics.
Or (shorter). Hello, John Richter here from Financial Mechanics and welcome to this video tutorial / next session in your T101 Financial Statement Modelling course.
Thanks for watching this video on Excel's Calculation Options. Somewhat to my surprise, as I walked through the various elements, quite a big topic, and we don't really treat it comprehensively enough on most of our courses
So if you think there isn't much to know, you might hear a few new things.
FAST Modeling Skills

2. Prioritizes cash receipts / payments during operating period
Cash Flow Waterfall
Prioritizes cash receipts / payments during operating period
Best not to intertwine with pre-conversion cash flows
Priority ranking unique to each transaction
e.g. Is capital expenditure paid 'ahead' of / above debt service (or below)
Not a statutory or presentational cash flow
Nor is it set-up to replace sources and uses of cash statement
Calculates cash flows at key intermediate points
Cash flow available for debt (service), CFADS
Cash flow available for shareholders / distributions
F1F9 Modelling:

3. Basic priority of payments Water flow analogy
Other income
Revenues
Debt service
(Lenders)
Operating costs
Capital expenditure
DSRA
Taxes
Distributions
(Shareholders)
Project Finance Modeling
FAST Modeling Skills

4. The heart of the model Where all agreements and analysis come together
Modeling Assumptions
Cash Flow
Principal Agreements
Technical assumptions Product pricing
Operations plan
Indexation / forex
EBITDA
EPC contract
Revenue contracts (and/or market studies)
O&M, fuel supply, O&M, insurance
[Capital expenditure]
Corporate structure
Jurisdiction's tax rules
Financing structure
Tax payments
Tax rules / legislation
Incorporation / partnership agreements
Project costs; leverage
Debt term; Interest rate Ratio sculpting
CFADS
Facility agreements
Inter-creditor agreement
Debt service
Equity structuring
Tax optimization
Accounting rules
Ratio lock-ups
DSRA
Debt service cover ratios
Equity distributions
Returns / valuation
Project Finance Modeling
FAST Modeling Skills

5. Contact John Richter Instructor Financial Mechanics info@fi-mech.com
FAST Modeling Skills