Critical Ratios and the First Necessary Condition for Success
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In this 4th course of the Introduction to Commercial Credit Skill Series, participants will explore performance ratio computation, interpret shifts in risk profiles, review conditions for business success, and identify key lender concerns based on critical performance ratios.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the third webinar session, participants explore the computation and interpretation of critical performance ratios in the process of establishing a company’s risk position and shifts in its risk profile from one period to the next. In addition, they review the first of two necessary conditions for business success following adjustments to reported net income that illustrate the actual profit position of a company. Finally, participants identify key areas of concern to the lender based on analysis of critical performance ratios.
Who Should Attend
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Commercial Credit Administration
- Commercial Loan Administration
- C & I Lending
- Corporate Lending
- Private Banking
- Loan Review
- Special Assets
- Internal Audit
- Health Care Provider Lending
- Specialized Lending
- Credit Analysis
Prerequisites
Some familiarity with an accrual income statement and balance sheet for a commercial business, as well as completion of Sessions 1 and 2.
Objectives
By the end of the webinar session, participants will be able to:
- Apply the methology necessary to properly compute key performance ratios.
- Understand the messages from the resulting performance ratios about a company’s risk position and shifts in it from one period to the next.
- Identify the impact of distributions and loans to owners on a borrower’s reported net income.
- Adjust reported net income for distributions and loans to owners and understand the different roles and classifications between loans to owners and loans from owners.
- Define the first necessary condition for business succcess and explain its rationale.
- Identify areas of interest to the lender in follow-up discussions with the borrower based on messages that emerge from an assessment of key performance ratios.
Materials(access provided with registration)
- Credit Refresher on Accounting Profit and Business Profit
- Terms and Concepts - Financial Risk Indicators
- Financial Statements for Total Coverage, Inc.
- Transcript for Follow-Up Call on Larry Crevin
- Exercise for the Session 3 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 4 of 5 in the Introduction to Commercial Credit Skill Series
The 5 C's of Commercial Credit
Financial Statements and Business Organizations
Personal Qualities and Competitive Advantage
Critical Ratios and the First Necessary Condition for Success
Non-Financial Red Flags and the Second Necessary Condition
