Using Financial Analysis Techniques in Forestry Research

Previous modules introduced the principles and methods of Discounted Cash Flow (DCF) and Cost Benefit Analysis (CBA) in relation to forestry projects. The current module extends the discussion of DCF to include its use in financial analyses. The purpose of CBA is to determine whether investment projects (used in the widest sense) are worthwhile from a social perspective, taking into account all costs and benefits including positive and negative externalities. In contrast, the focal point of financial analysis is assessing the impact of the project of the wealth of the individual or firm considering the project. In this module, concepts and methods of financial analysis (FA) will be introduced, and then applied to a case study of financial evaluation of a forestry project