Course Objectives

• • Understand the concept of credit analysis that will help credit analysts and other interest parties to extract meaningful information from the key sources of financial data and information – the balance sheet, the income statement, and the statement of cash flows.
  • Understand balance sheet structures in detail and the key measures – such as the debt/equity ratio and various liquidity ratios – that can be derived from balance sheet values.
  • Understand the structure and elements of an income statement and various income/profit measures, such as gross and net income/profit, and profitability ratios, such as gross and net margins, that can be derived from income statement values. In addition to measures such as earnings per share, dividend payout ratios, and dividend cover.
  • Get an overview at the statement of cash flows, and the cash conversion cycle and its impact on working capital ratios. Working capital days measures are also covered, including the use of such measures to identify the drivers of cash flow from operations. Other measures, such as EBITDA, are also explained, along with balance sheet structural elements – such as overleverage – that can have adverse cash flow implications. Finally, the topic of cash flow forecasting and associated stress testing are also introduced.
  • Identify how information from financial statements can be used to calculate key financial ratios such as return on equity (ROE) and other ratios that can be calculated using information from sources such as share prices
  • Recognize the importance of financial forecasting in overcoming the backward-looking nature of audited financial statements and the need for clear assumptions when forecasting, the role of stress testing, and the common pitfalls that analysts need to watch out for when building their forecasts.
  • Recognize how a business entity’s structure, business models, and the industry in which it operates affect the size and complexity of the entity and its financial statements.
  • Understand the techniques credit analysts use to gauge the strengths and weakness of a business. The scenario shows how analysts apply different financial measures and ratios to a company’s historical and forecast financial statements. It also demonstrates how analysts employ stress testing and scenario analysis to estimate company performance under different stress scenarios. Prerequisite Knowledge: A good understanding of financial statements and the techniques of credit analysis is required

Who is the course for?

This course is aimed primarily at those working in a commercial/wholesale credit environment where risk assessment and credit approval is based on objective and subjective analysis and experience. However, much of the material is sufficiently generic to be relevant to retail/consumer/SME banking institutions as well.

Duration

8.83 Hours

Content

• • Credit Analysis – An Introduction
  • Credit Analysis – Balance Sheet Analysis
  • Credit Analysis – Income Statement Analysis
  • Credit Analysis – Cash Flow Analysis
  • Credit Analysis – Performance & Other Measures
  • Credit Analysis – Forecasting
  • Credit Analysis – Other Factors
  • Credit Analysis – Scenario
  • Credit Analysis – Assessment

*The e-learning program is non-refundable once an account is created.