Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

More documents

Recommendations

Info

Railway Reform: Toolkit for Improving Rail Sector Performance 4. Financial Sustainability for Railways Timely payment If railways are experiencing financial difficulties, they may attempt to manage cash flows by extending payment periods for their bills. The size of accounts payable relative to operating costs will indicate the magnitude of the problem of timely payments. Ratios Ratios commonly used to analyze costs are shown in the table below. Financial ratios for costs are most useful when paired with measures of physical productivity and benchmarked against railways with similar traffic and operating characteristics. The World Bank Page 54
Railway Reform: Toolkit for Improving Rail Sector Performance 4. Financial Sustainability for Railways Box 4.2 Financial Ratios for Operating Costs Ratio Calculation Use Operating cost/traffic unit Labor cost/traffic unit Operating expenses/traffic unit (Costs and traffic units should be for comparable entity. 41 ) Labor expenses/traffic units Benchmark costs against other railways; compare to unit revenue Benchmark labor costs against other railways; compare to unit revenue Labor productivity Traffic units/number of staff Benchmark labor productivity against other railways Traffic density Traffic units/track-km Benchmark infrastructure productivity against other railways Average payment period [Accounts payable/(operating expenses-depreciation)]*365 Measures days of operating expenses represented by accounts payable. Compare to normal payment period, e.g. 60 days. 4.2.3 Investment Railways are capital intensive businesses. This means that, in most years, a high proportion of the railway’s cash flow should be spent on investment. Financing activities (borrowing and raising capital) allow the railway to invest more than its annual cash flow during years that big investments are needed. Capital grants from government are also a source of financing in some countries. Railways can function for years without investment because railway assets have long life spans. Without regular investment, the trains can continue to run, but costs rise for materials and maintenance, and service quality and asset values decline. A railway that is not regularly investing, however, is “eating” its assets. Over the longer term, the railway becomes unsustainable. This is acceptable in markets the railway is planning to exit. In fact, a critical measure of financial sustainability is whether the railway can manage sufficient investment over time to ensure safety, renew assets and serve new markets. Insufficient investment over time risks massive and potentially unmanageable future investment requirements. The adequacy of investment is not easily measured by a set of financial ratios, but a first check would reveal if depreciation is higher than investment, indicating the railway is likely under investing. 42 41 If entity includes both freight and passenger activity, the usual traffic unit is passenger-km + ton-km. This definition should be used with care; See Annex 2 for discussion of traffic units. 42 If railway assets are undervalued, this check is not valid. The World Bank Page 55
Page 1 and 2:
Railway Reform: Toolkit for Improvi
Page 3 and 4:
Page 5 and 6:
Page 7 and 8:
Page 9 and 10:
Page 11 and 12:
Page 13 and 14:
Page 15 and 16:
Page 17 and 18:
Page 19 and 20:
1 Railway Reform: Toolkit for Impro
Page 21 and 22: Railway Reform: Toolkit for Improvi
Page 29 and 30: 2 Railway Reform: Toolkit for Impro
Page 71: Railway Reform: Toolkit for Improvi
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
Page 165 and 166:
Page 167 and 168:
Page 169 and 170:
Page 171 and 172:
Page 173 and 174:
10 Railway Reform: Toolkit for Impr
Page 175 and 176:
Page 177 and 178:
Page 179 and 180:
Page 181 and 182:
Page 183 and 184:
Page 185 and 186:
Page 187 and 188:
Page 189 and 190:
Page 191 and 192:
Page 193 and 194:
Page 195 and 196:
Page 197 and 198:
Page 199 and 200:
Page 201 and 202:
Page 203 and 204:
Page 205 and 206:
Page 207 and 208:
Page 209 and 210:
Page 211 and 212:
Page 213 and 214:
Page 215 and 216:
Page 217 and 218:
Page 219 and 220:
Page 221 and 222:
Page 223 and 224:
Page 225 and 226:
Page 227 and 228:
Page 229 and 230:
Page 231 and 232:
Page 233 and 234:
Page 235 and 236:
Page 237 and 238:
Page 239 and 240:
Page 241 and 242:
Page 243 and 244:
Page 245 and 246:
Page 247 and 248:
Page 249 and 250:
Page 251 and 252:
Page 253 and 254:
Page 255 and 256:
Page 257 and 258:
Page 259 and 260:
Page 261 and 262:
Page 263 and 264:
Page 265 and 266:
Page 267 and 268:
Page 269 and 270:
Page 271 and 272:
Page 273 and 274:
Page 275 and 276:
Page 277 and 278:
Page 279 and 280:
Page 281 and 282:
Page 283 and 284:
Page 285 and 286:
Page 287 and 288:
Page 289 and 290:
Page 291 and 292:
Page 293 and 294:
Page 295 and 296:
Page 297 and 298:
Page 299 and 300:
Page 301 and 302:
Page 303 and 304:
Page 305 and 306:
Page 307 and 308:
Page 309 and 310:
Page 311 and 312:
Page 313 and 314:
Page 315 and 316:
Page 317 and 318:
Page 319 and 320:
Page 321 and 322:
Page 323 and 324:
Page 325 and 326:
Page 327 and 328:
Page 329 and 330:
Page 331 and 332:
Page 333 and 334:
Page 335 and 336:
Page 337 and 338:
Page 339 and 340:
Page 341 and 342:
Page 343 and 344:
Page 345 and 346:
Page 347 and 348:
Page 349 and 350:
Page 351 and 352:
Page 353 and 354:
Page 355 and 356:
Page 357 and 358:
Page 359 and 360:
Page 361 and 362:
Page 363 and 364:
Page 365 and 366:
Page 367 and 368:
Page 369 and 370:
Page 371 and 372:
Page 373 and 374:
Page 375 and 376:
Page 377 and 378:
Page 379 and 380:
Page 381 and 382:
Page 383 and 384:
Page 385 and 386:
Page 387 and 388:
Page 389 and 390:
Page 391 and 392:
Page 393 and 394:
Page 395 and 396:
Page 397 and 398:
Page 399 and 400:
Page 401 and 402:
Page 403 and 404:
Page 405 and 406:
Page 407 and 408:
Page 409 and 410:
Railway Reform: Toolkit for improvi
Page 411 and 412:
Page 413 and 414:
Page 415 and 416:
Page 417 and 418:
Page 419 and 420:
Page 421 and 422:
Page 423 and 424:
Page 425 and 426:
Page 427 and 428:
show all

Railway Reform: Toolkit for Improving Rail Sector Performance - ppiaf

Create successful ePaper yourself

Delete template?

Save as template?