A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Dev is principal of Devon Risk Advisory Group and engages in consulting, speaking and training on a wide range of risk, credit, and lending topics. As former SVP and senior credit policy off Read more
This session on financial condition is the companion piece to “How to Assess a Borrower’s Operating Performance which explained how to bankers, lenders and credit professionals:
1-Howto evaluate a borrower’s operating performance—revenue generation, productivity, efficiency, and profitability--as they analyze the information disclosed in its income statement.
2-Howto identify the critical elements of the profit and loss statement and their roles in driving a business borrower’s operating performance.
3-Howto judge a borrower’s operating performance trends and results against industry averages
Overview:
Pandemic-era balance sheets are misleading. Learn how to evaluate the true financial condition of borrowers.
Government subsidies and operating oddities caused by COVID-19 have hit the balance sheets of potential borrowers. Relying on outdated expectations can lead you to approve risky loans and ignore viable opportunities to expand your lending portfolio.
You urgently need to update your procedures for evaluating loan applicants’ liquidity, leverage, and solvency. By analyzing and interpreting internal trends, you can compare them to industry averages and evaluate their impact on repayment ability. Focus in this area will allow you to justify lucrative loans and avoid undue risk.
Course Outline:
• Liquidity—borrower’s ability to meet its short-term obligations
o Current / Quick Ratios
o Working Capital Analysis
• Leverage-borrower’s ability to balance its sources of funds from creditors and owners
o Various ratios to measure the proportion of support provided by owners and creditors
o Ensuring matching of short-assets with short-term debt, long-term assets with L-T debt
• Solvency-borrower’s ability to internally sustain its asset base, pay its obligations, and reward its owners
o Measures for determining the ability of the firm to simultaneiously satisfy the expectations of lenders and owners while maintaining the earning assets of the firm
o Sustainable growth vs. actual growth
• Use of industry ratios to measure borrower’s financial condition to its peers
A case study is used to demonstrate how to evaluate financial condition
What You Get:
• Training Materials
• Live Q&A Session with our Expert
• Participation Certificate
• Access to Signup Community (Optional)
• Reward Points
Who Will Benefit:
• Credit analysts
• Credit department managers
• Loan underwriters
• Commercial bankers
• Business and commercial lenders
• Loan reviewers
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