About the Course:

The session will explain the importance of revenues in projecting financial statements and cash flow. Then the session will show participants how to project the income statement, balance sheet and cash flow to calculate the loan amount needed to support projection and evaluate the ability of the borrower to repay the loan. Evaluation of underlying assumptions includes the feasibility of revenue growth rate, profitability, productivity, efficiency, earning retention, and leverage. Besides calculating the loan amount needed to support the financial projection, an analysis of the asset collateral base available to support repayment will be examined.

Learn key assumptions in a projection and how to assess validity, the value of a downside-most likely projection to stress test the assumptions. The session shows participants how to project the income statement, balance sheet and cash flow to calculate the loan amount needed to support the income statement projection and evaluate the ability of the borrower to repay the loan. How much inventory does the borrower need to stock and how much credit can the borrower extend to achieve its revenue forecast? What levels of profitability, productivity, efficiency, earning retention, and leverage are anticipated in order to estimate the loan amount needed and the asset collateral base available to repay the loan?

Course Objective:

• Financial organizations extend credit to borrowers if borrowers can show the ability to repay the loans extended. Borrowers naturally want to grow their firms over time, so they are looking for lenders willing to go the distance, but the lenders are also looking for assurance that borrowers will also be able to repay these longer-term loans. Ideally, a request for a five-year loan should be supported by a 5-year cash flow projection. This session explains how to generate a long-term projection to evaluate a borrower’s ability to repay a long-term loan.

Who is the Target Audience?

• Credit analysts, credit managers, credit risk managers, risk managers, enterprise risk managers, chief credit officers, senior lenders, senior lending officer, bank director, chief executive officer, president, board chairman

Basic Knowledge:

• Basic accounting and finance courses