UCA Cash Flow, Traditional Cash Flow and EBITDA
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In this 1st course of the Cash Flow Statements Vs. Proxies for Risk Assessment Skill Series, participants will construct a UCA cash flow statement, incorporating balance sheet information, to identify borrowing causes, debt service sources, financing requirements, and compare UCA results with traditional "cash flow" and EBITDA proxies.
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Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
duration
1 hr.
Prep Time
1
Quiz
Overview
In this first session of the Course, which runs approximately two hours including a rest break, participants identify the financial information necessary to construct a Uniform Credit Analysis (UCA) cash flow statement and explore the reasons for incorporating balance sheet information in the construction and use of a comprehensive cash flow statement. They manually construct a UCA cash flow statement and assess the content and relevance of each section in the UCA cash flow statement in identifying 1) borrowing causes, 2) cash sources of interest-bearing debt service, 3) the financing requirement or surplus, and 4) the sources of cash to meet a financing requirement for a borrower or prospective borrower. In addition, participants contrast UCA cash flow results and signals about borrower cash flow adequacy with two cash flow proxies - traditional "cash flow" and EBITDA - in exploring the analytical limitations of cash flow proxies based solely on income statement information.
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
- Private Banking
- Loan Review
- Special Assets
- Internal Audit
- Construction Lending
- Non-Profit and Municipality Lending
- Health Care Provider Lending
- Specialized Lending
- Credit Analysis
Prerequisites
A working knowledge of accounting concepts and principles, including familiarity with debits and credits, along with an understanding of the generic credit decision process.
Objectives
By the end of the session, participants will be able to:
- Identify the financial information necessary to construct a UCA cash flow statement.
- Understand the importance of linking balance sheet accounts to specific income statement accounts in the process of integrating the balance sheet and income statement into a cash flow statement.
- Implement the step-by-step mechanical process of constructing the UCA cash flow from accrual balance sheet and income statement information.
- Identify 1) the borrowing causes, 2) the sources of cash used by the borrower to service interest-bearing debt, 3) the financing requirement or financing surplus, and 4) the source of cash to meet the financing requirement, if one exists, by reference to the UCA cash flow statement.
- Understand the limitations of traditional "cash flow" and EBITDA in identifying 1) the borrowing causes, 2) the sources of cash used by the borrower to service interest-bearing debt, 3) the financing requirement or financing surplus, and 4) the source of cash to meet the financing requirement if one exists.
- Identify differences in debt service coverage based on traditional "cash flow" and EBITDA compared to debt service coverage based on information in the UCA cash flow statement.
Materials(access provided with registration)
- Credit Refresher on The ABCs of Cash Flow
- Excerpts from Financial Statements
- Exercise for the Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 1 of 4 in the Cash Flow Statements Vs. Proxies for Risk Assessment Skill Series
UCA Cash Flow, Traditional Cash Flow and EBITDA
Cash Impact Analysis and Management Assessment
FASB 95 Cash Flow Statement conversion to UCA
Cash Flow Proxies, Debt Capacity, and the UCA Cash Flow Statement
