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Target Audience
This course is for all analysts and lenders who require advanced credit analysis tool and techniques in assessing risk and establishing loan structure.
 
 

Level III

311 Financial and Non-Financial Red Flags
321 Profitability and Cash Flow
331 Sales Growth and Borrowing Causes
341 Operating Profit and Debt Capacity
351 Management Assessment and the Credit Decision
 
 
   
Course Objectives
Explore the factors that drive and determine the amount of short and long-term interest-bearing debt that a company can support from operating profit and cash flow;
Estimate the dollar amount of short-term interest-bearing debt a company can support from operating profit and cash flow in the absence of long-term interest-bearing debt;
Estimate the dollar amount of short-term interest-bearing debt a company can support from operating profit and cash flow for a fixed amount of long-term interest-bearing debt;
Estimate the relative and absolute dollar amount of deterioration in operating profit that a company can suffer before its debt capacity falls below interest-bearing debt outstanding;
Examine and identify the differences between estimated debt capacity and the use and application of a borrowing base in setting limits to short-term debt outstanding; and
Examine possible loan covenants that, if honored, would assure a borrower has sufficient operating profit and cash flow to properly service all short and long-term interest-bearing debt.
6 CEUs
Course Materials

Note on Estimating Debt Capacity in Assessing Risk
1999 Financial Statements for Benson Manufacturing, Inc.
Loan Officer Summary for Benson Manufacturing, Inc.
Loan Officer Memorandum for Benson Manufacturing, Inc.
Selected Risk Measures for Benson Manufacturing, Inc.

1999 Financial Statements for Sandover Contractors, Inc.
Loan Officer Summary for Sandover Contractors, Inc.
Loan Officer Memorandum for Sandover Contractors, Inc.
Selected Risk Measures for Sandover Contractors, Inc.
Exercise Set (downloaded from Shockproof! Training website)
Online Review Quizzes
Solution Set (downloaded from Shockproof! Training website)
Access to the Shockproof! Training Resource Center
Inclusion in the Shockproof! Training Discussion Forum
Online Credit Skills Proficiency Exam
Upon Completion

Participants who successfully complete the workshop will be able to:
Identify the factors that determine the debt capacity of a company and the manner in which changes in each factor impact resulting debt capacity;
Quantify the debt capacity of a borrower under various conditions in which the relationship between short and long term debt vary dramatically;
Estimate the degree of stress or deterioration in operating profit that a borrower could suffer before it can no longer support its interest-bearing debt;
Estimate the degree of stress or deterioration in balance sheet management that a borrower could suffer before it exhausts existing debt availability;
Identify the relationship between current or projected cash flow from business operations and underlying debt capacity; and
Identify the necessary elements in a debt service covenant that would provide maximum assurance a borrower will generate sufficient cash flow from business operations to fully service all interest-bearing debt.
Pricing and How to Order