Personal Cash Flow, Guarantor Analysis and the Second Way Out
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In this 3rd course of the Commercial Real Estate Underwriting Skill Series, participants will differentiate between description and analysis, construct a personal cash flow statement, estimate personal cash flow for debt service, assess guarantor support, and explore global cash flow statements' benefits and limitations for credit decisions.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the third webinar session, participants review the fundamental differences between description and analysis in assessing and interpreting profitability and cash flow. They construct a personal cash flow statement from personal financial statement and personal income tax return information. They estimate the amount of personal cash flow available to support business debt service in good times and in a business cash flow crisis, as well as estimate the amount of ready cash support a guarantor can provide in a business cash flow crisis. In addition, participants explore the construction of a global cash flow statement and assess its benefits and limitations as an analytical tool in reaching a credit decision.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Real Estate Administration
- Commercial Loan Portfolio Management
- CRE Lending
- Private Banking
- Loan Review
- Special Assets
- Construction Lending
- Credit Analysis
Prerequisites
Familiarity with accrual financial statements and accrual financial statement terminology for a commercial real estate operation, as well as completion of prior sessions in the Credit College.
Objectives
By the end of the webinar session, participants will be able to:
- Construct a personal cash flow statement using personal financial statement information and personal income tax return information.
- Identify the likely amount of personal cash flow available to support business debt service in good times based on the resulting personal cash flow statement.
- Identify the amount of ready cash available to a guarantor from business-related cash flow and from the liquidation of personal assets in a cash flow crisis and evaluate the estimate of ready cash against the cash needed to support the guarantor's life style and personal living expenses.
- Implement the analytical process for conducting global cash flow analysis for companies with common ownership, including the specific borrower.
- Construct global cash flows under various assumptions about the owners' ability to provide ready cash in a crisis, drawing on information in the personal cash flow statement and personal financial statement of the guarantor.
- Assess the use and application of global cash flow analysis in identifying likely cash pressures from one or more related parties that may impede the borrower's ability to properly service its interest-bearing debt.
Materials(access provided with registration)
- Credit Refresher on Global Cash Flow vs. Global Cash Support
- Excerpts from Financial Statements for Clovis Supply, Inc., Fresno Properties LLC, and Modesto Services, Inc.
- Personal Financial Statement and Personal Income Tax Returns for Fritz Schumacher
- Exercise for the Session 3 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 3 of 8 in the Commercial Real Estate Underwriting Skill Series
The CRE Analytical Process and Credit Write-Up
Borrower Cash Flow, Ratio Analysis and the First Way Out
Personal Cash Flow, Guarantor Analysis and the Second Way Out
Appraisal Reports and Assessing Market Value
The Income Capitalization Approach and the Cap Rate
Underwriting Standards, NOI and Breakeven Analysis
Management Assessment, Competitive Forces, and Projected Performance
Repayment Risks and Covenants
