Two methods for reserve analysis are:

The two methods for reserve analysis are indeed component and cash flow.

The component method of reserve analysis focuses on identifying and evaluating individual components of a community's infrastructure or assets, such as roofs, paving, and systems like plumbing and electrical. Each component is analyzed for its useful life, replacement costs, and expected future expenses, allowing community managers to create a comprehensive understanding of what will be needed financially to maintain the property over time. This method helps to ensure that adequate reserves are set aside in anticipation of future repairs and replacements.

On the other hand, the cash flow method emphasizes the cash management aspect of financial reserves. This approach models the cash inflows and outflows over a specified period, helping to ensure that there are sufficient funds available when needed. It allows community managers to forecast when major expenses will occur and to plan for sufficient cash reserves to cover these costs without financial strain.

The combination of these two methods provides a robust framework for reserve analysis, ensuring that communities are financially prepared for future obligations while maintaining their physical assets.