Ratio Messages On Profitability and Cash Flow
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In this 3rd course of the Cash Flow Analysis & Applications Skill Series, participants will identify key performance ratios to assess borrower profitability and cash flow, examine the impact of Business Driver ratios, and review UCA cash flow statements to understand differing debt service messages.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
Participants identify a handful of key performance ratios among the vast array generated by computer output that explain the accrual and cash position of a business so that they may better use their time in assessing the core issues that determine borrower profitability and business cash flow. They explore the impact of movements in these key performance ratios - the Business Driver performance ratios - on borrower profitability, retained earnings, and business cash flow. In addition, they examine the relative role and importance of each Business Driver performance ratio in explaining bottom line profit, business profit, business cash flow, changes in working capital, and changes in leverage. In the process of doing so, Participants review the Uniform Credit Analysis (UCA) cash flow statement and identify the reasons its debt service messages may differ significantly from those based on cash flow proxies such as traditional cash flow.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Credit Administration
- Commercial Real Estate Administration
- Commercial Loan Administration
- C & I Lending
- CRE Lending
- Corporate Lending
- Loan Review
- Special Assets
- Internal Audit
- Construction Lending
- Non-Profit and Municipality Lending
- Health Care Provider Lending
- Private Banking
- Specialized Lending
- Credit Analysis
Prerequisites
Familiarity with the customary array of performance ratios, e.g., profitability ratios, debt coverage ratios, turnover ratios, liquidity ratios, leverage ratios, and some exposure to the Uniform Credit Analysis (UCA) cash flow statement.
Objectives
By the end of the webinar, participants will be able to:
- Identify the most important financial statement accounts and balances that a company must manage in shaping its bottom line profit and business cash flow available to service interest-bearing debt.
- Identify the Business Driver performance ratios that measure a company's ability to manage the key financial statement accounts and balances critical to its profitability and business cash flow.
- Understand and provide reasons why the Business Driver performance ratios do not apply equally to all business organizations but, rather, vary between a manufacturer or distributor, a service company, and a real estate management operation.
- Identify the anticipated impact on a company's fundamental and bottom line profit, retained earnings, and business cash flow from changes in each of the Business Driver performance ratios.
- By reference to movements in the Business Driver performance ratios for a beverage distributor, explain the reasons for bottom line profit, business profit and the change in net worth, the business cash flow deficit for the year, deterioration in working capital, and an increase in leverage.
- Understand and state the benefits from focus on the Business Driver performance ratios and movements in them from period to period in enhancing the quality and efficiency of credit assessment.
Materials(access provided with registration)
- Credit Refresher on Information Overload
- Credit Refresher on Traditional "Cash Flow"
- Terms and Concepts - Financial Risk Indicators
- Financial Statements for Buckeye Beverages, Inc.
- Financial Statements for the Cardiology Medical Group
- Exercise for the Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 3 of 5 in the Cash Flow Analysis & Applications Skill Series
Global Cash Flow
Working Capital and UCA Cash Flow
Ratio Messages On Profitability and Cash Flow
Covenant Use in Controlling Cash Outflows
Debt Capacity and Cash Flow
