7.5 Financial Analysis from Different Points of View Most projects direetly underaken by governmeek, a involving some goverement intervention through grants, foans or subsidies, have ofher stakeholders who would want to know the projocts impact en them. Sukcholden broadly refer to all those affected by the project, for example, the owners, participeting banks, any (ceher) govenment department peoviding loans ce grants er collecting taxes, competions, or workens. It is therefore necesary to condust the analyses from the points of view of the different inportant sakeholden to ensure a project's sastainalility and raccess. A single powerfal stakeholder advernely affected may derail an entire propoct. The variables generally included in x canhflow statenent were discusied is an earlier section (Section 7.3 Finuseial Cashfforax). Some variables may be relevam from one stakeboller's point of government and govemment-relatod projocts are from the viewpoints of (1) the ewner, (2) all investors combined (banker's point of view or total investment point of view); asal (3) the budget. These poins of vicw are diveused below, focusing on the differences in the variables included in the analyses from the different perspectives. 7.5.1 Owner's Point of view Omens of a project, whether a private investor receiving some form of wipport from governmeat or a governmeat departmeat anderiding a project, includes all recelipes and expenditures related to the profoet in the eashflow seatement to determine whether he is made betser off or not. Consequently, moject sponsors receive the net cashflow after paying of all other imolved parties. A cashllow statemeat froen an ewner's point of vicw will include the loan disburvement as an inflow and all 124 Goves ?. Freste fowess subseguent repeyments of loan and interest as expendibures. If a project receives grants or subsidies, these shoeld be incladed as receiges in the cashflow staterient; and if the peoject fays faxes, these thould be included as cash outfrow, If a project sponsor would give ep an existiog income source to undertake a project, the forctone eamings (opportunity cost) should be iocluded as an expenditure in the cashflow statement. 7.5.2 Total Investment (Banker's) Point of View This point of view examines the rccurns to the total invested capizal. In celner wordk, this analysis disfegarts asy distinctions in fitance sonece. Is wants to know whether or sot financial ncceipts generated from project operations are enough to cover the invectment and operations expendinurec, and peovide a sufficieat retuen. This poim of view is alwo known as the baniker's poine of view, because a tunk will be interested in exarsicing the expected roceiges and expenditures to determine if the net cashflow is se्eficient to cover loan and interest ropayments. The banker typically has firch clains to a project's assets and net cachflows, and so the banker's net cashflow is the projoct's gross receipts net of eperatieg and investment expenditures. The only difrerence between analysis from the owser's and a bunker's point of vicw is finascingSpecifically, the cachflow statement from the sotal investmeet point of view will inclode all iterar incloded froen the owner's perspective excep loan and loan reyayments. 7.5.3 Budgetary Point of View The parpose of analysis frue a budgetary point of vicw is to envate that the relevad degartment. has cocegh respunces to firance its obligations to the project. If a goverment department is tho project owner, the only sistinction between a cashflow statement froea the ew net's point of view and from a budget point of view is that eppoctunity coses are not taken inso accoent in the later staremeat. On the other hand, if govermment ievoivement is in the form of providing cheap credit, sobsidies, or grants, then the cashflow stadernent will anly reflect these transactions. 7.5.4 Other Perspectives Although the three views outlined above are the most typical ones considered in financial analysis, it is also important to analyze a project's impacts on all involved parties. For example, a project may create a negative impact on competitors and is likely to be resisted by them. Solutions should then be considered. It is necessary to estimate the magnitude of the damage to any affected group. Besides competitors, other affected groups may include suppliers of inputs or downstream processors, among others. Sometimes a subule difference may exist benveen the total invested capital and the banker's point of view. Consider for example, a govemment department encouraging the construction of low-income housing projects by repaying the interest on the housing loan. An analysis from the total invested capital point of view will not concern itself if a loan is subsidized or not. A banker, however, will definitely prefer lending to a project with a govemment loan subsidy than a similar one without it. 125