Financial analysis

Financial analysis considers any investor revenues and costs associated with the activity, including the market value of goods and services produced, sold, or otherwise compensated for, as well as any costs to initiate, operate and maintain the activity. Financial analysis also includes any positive or negative public incentives for the activity, such as subsidies or taxes, as either revenues (subsidies) or costs (taxes, tariffs etc.). Future revenues and costs are discounted to their current value using discount rates applicable to the investor (e.g. market interest rates). The activity is financially feasible and viable if it can be funded and generates positive net returns (revenues minus costs) that meet the investors’ target return on investment.