Product: Credit Curriculum, Fundamentals

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1. The Language of Business

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... debits and credits do matter

In this self-study course, participants review and examine the process of applying debits and credits in recording common business transactions. They review the accounting equation and its importance in assuring the proper recording of debits and credits. They explore the financial statement impact of incorrect accounting entries. In addition, participants examine the role of critical accounting principles and the resulting impact on financial statements from their omission or misapplication. Further, they identify the differences between cash and accrual accounting.

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Target Audience:

Inexperienced analysts and lenders interested in reviewing and exploring the basic concepts, principles, and application of accounting rules and regulations in recording business transactions.

Prerequisites:

General familiarity with accrual accounting.

Objectives:

By the end of this self-study course, participants will be able to:

Explain the use of debits and credits in recording business transactions and identify the central role of the accounting equation in preparing accrual financial statements.
Apply the proper application of debit and credit entries to a series of business transactions in compiling a cash and accrual income statement for a company and identify the reasons for differences in resulting cash and accrual profits and their implications for business risk.
Trace the impact on reported profits, cash flow, and balance sheet amounts and composition from incorrect accounting entries.
Identify the differences between accrual and cash revenue recognition and the resulting cash and accrual impact on business profits and cash flow.
Convert a cash-based income statement to an accrual income statement by use of specific accounting entries.
Provide reasons why accrual financial statements are necessary as a complement to cash-based business income tax returns in identifying repayment sources and assessing borrower risk.

Credit Curriculum Courses – Fundamentals

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Two to three hours per exercise, depending on the complexity of the issues.

Yes

2. Financial Statement Analysis

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... running the numbers in search of profit

In this self-study course, participants review and examine the legal and financial statement differences between Subchapter C corporations, Subchapter S corporations, partnerships, limited liability companies, and sole proprietors. They explore the use and impact of distributions and loans to owners on reported profit and profit available to service a borrower's interest-bearing debt. They construct and interpret key financial performance ratios in the credit assessment process across different business organizations.

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Target Audience:

Inexperienced analysts and lenders interested in reviewing and exploring the differences in business organizations, the role and impact of distributions and loans to owners, and the construction and use of key performance ratios in assessing a borrower's risk profile.

Prerequisites:

General familiarity with accrual financial statements.

Objectives:

By the end of this self-study course, participants will be able to:

Identify the differences in the structure and composition of financial statements for Subchapter C corporations, Subchapter S corporations, partnerships, limited liability companies, and sole proprietorships.
Explain the differences in owner composition, in owner income tax obligations for company profit, and in owner liability for company debt obligations across the range of business organizations.
Explain the purpose and intent of distributions, withdrawals, and loans to owners and the manner in which they are recorded in the financial statements.
Calculate and interpret key performance ratios, including adjustments to account for the impact of distributions, withdrawals, and loans to owners on critical profitability measures.
Identify the amount of distributions, withdrawals, and loans to owners that exceed the implied personal income tax obligation and, therefore, potentially impact reported EBITDA, operating profit, and the borrower risk profile.
Examine and assess the differences in key performance ratios across the range of business organizations and explain the importance of the first necessary condition for business success in risk assessment.

Credit Curriculum Courses – Fundamentals

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Two to three hours per exercise, depending on the complexity of the issues.

Yes

3. Financial Statement Quality

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... some numbers are better than others

In this self-study course, participants review and examine the analytical challenges presented by company prepared, compiled, reviewed, and audited financial statements. They explore the resulting impact on key financial performance ratios. They identify linkage between the income statement and balance sheets as well as identify balance sheet counterpart accounts for each revenue and expense account. Participants review the role of footnotes and examine the information they may provide about financial quality and debt service prospects.

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Target Audience:

Inexperienced analysts and lenders interested in exploring the differences in performance ratios and borrower risk assessment based on company-prepared, compiled, reviewed, and audited financial statements.

Prerequisites:

General familiarity with accrual financial statements.

Objectives:

By the end of this self-study course, participants will be able to:

Identify likely differences in the quality, reliability and usefulness of financial information associated with company-prepared, compiled, reviewed and audited statements.
Identify the different analytical challenges associated with company-prepared, compiled, reviewed and audited statements.
Identify the use of estimates in financial statements and assess the importance of estimate accuracy in providing a fair representation of the company's financial position.
Explore the linkage between the income statement and the balance sheet with specific focus on balance sheet counterpart accounts for all income statement revenue and expense accounts.
Explain the role footnotes play in amplifying specific accounts in the financial statements as well as providing additional information about debt service capabilities; and
Assess the uses and limitations of interim statements and the uses and limitations of performance ratios based on those statements.

Credit Curriculum Courses – Fundamentals

View Materials and Preparation

Two to three hours per exercise, depending on the complexity of the issues.

Yes

Credit Curriculum

I. Credit Curriculum: Fundamentals - Overview

Target Audience

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Credit Curriculum

I. Credit Curriculum: Fundamentals - Overview

Target Audience

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