Business Income Tax Returns and Ratio Analysis
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In this 6th course of the Federal Tax Return Analysis Skill Series, participants will examine differences in financial ratios from tax returns and accrual statements, extend the process of transforming tax returns into accrual income statements, and assess the value of using accrual statements for borrower analysis.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the sixth webinar session, participants examine the differences in key financial performance ratios computed from business income tax returns and accrual financial statements. Building on the issues explored in the prior webinar session on the use of information in Schedule K and Schedule M-1 in constructing an accrual income statement, they revisit and extend the process of transforming the quasi-income statement on the first page of business income tax returns for partnerships, limited liability corporations, and Subchapter S corporations - Schedule 1065 and Schedule 1120S - into an accrual income statement. Further, participants assess the value of discarding business income tax returns as the basis for borrower analysis in favor of transforming Schedule 1065 or Schedule 1120S into an accrual income statement for use in proper ratio construction and borrower assessment.
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 Loan Administration
- Commercial Loan Portfolio Management
- C & I Lending
- Corporate Lending
- Loan Review
- Special Assets
- Internal Audit
- Non-Profit and Municipality Lending
- Health Care Provider Lending
- Specialized Lending
- Credit Analysis
Prerequisites
Familiarity with accrual financial statements and the use of ratios and cash flow statements in assessing borrower risk.
Objectives
By the end of the webinar session, participants will be able to:
- Identify differences in the revenue and expense amounts on business income tax returns and revenue and expense accounts on the accrual income statement along with the reasons for the differences.
- Use information captured in Schedule M-1 on the business income tax returns to reconcile accrual reported profit with taxable income on the business income tax returns.
- Determine differences, if any, between the Schedule L balance sheet on business income tax returns and the accrual balance sheet.
- Identify the similarities and differences between statements to the business income tax returns and footnotes to accrual financial statements.
- Identify the role a Section 179 deduction plays in computing key performance ratios for each business organization.
- Identify differences in critical performance ratios computed from business income tax returns and accrual financial statements and the relevance of these differences in conducting financial analysis.
Materials(access provided with registration)
- Credit Refresher on Business Income Tax Returns and Ratio Analysis
- Terms and Concepts - Financial Risk Indicators
- Form 1120S for Benson Manufacturing, Inc.
- Accrual Financial Statements for Benson Manufacturing, Inc.
- Exercise for the Session 6 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 6 of 8 in the Federal Tax Return Analysis Skill Series
Business Income Tax Returns
The Section 179 Deduction
Understanding Schedules K-1
Personal Income Tax Returns and Cash Flow
Schedule M-1 and the Accrual Income Statement
Business Income Tax Returns and Ratio Analysis
Business Income Tax Returns and Cash Flow Analysis
Cash Based Income Tax Returns
