Cash Flow Analysis Of Borrower's Repayment Ability
Friday, January 15, 2021
10:00 AM PST | 01:00 PM EST
60 Minutes
More Trainings by this Expert Product Id : 503489
There is an old saying in credit analysis, “Borrowers pay back loans from cash flow, not profits.” But it is not just cash flow; it is cash flow from operations that is the most desirable source of repayment because it is generated by a borrower managing its working capital assets and earning a sustainable profit.
This webinar will explain the difference between profits and cash flow as well as cash flow from operations vs. cash flow from financing and investing activities. After all, borrowing from another lender or liquidating fixed assets to pay you back ultimately hurts the long-term viability of the borrower.
Why you should Attend
The webinar will explain how the cash flow statement is derived from the balance sheet and the income statement, and then it will describe its three component cash flow activities-operating, financing, and investing.
By the end of the session, you will see how cash flow is incorporated into the analysis and underwriting of a business borrower.
Areas Covered in the Session:
Upon completion of this webinar, the participant will have a good understanding of how cash flow is calculated and more importantly, how to interpret its meaning. Specific areas that will be covered include:
- An explanation of how Cash Flow Analysis relies on the conversion of an Accrual Basis Financial Statement into a Statement of Cash Flow (or Cash Basis Statement) because loans are repaid with cash and not profits
- Global Cash Flow Analysis Methodology utilizing financial statements, tax returns and credit reports of commercial borrowers and individuals
- Comparison of operating cash flow to the more inaccurate traditional cash flow (profits plus depreciation) and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) method of determining cash flow
- A free cash flow method which can convert EBITDA into operating cash flow
Who Will Benefit:
- Commercial Loan Officers
- Credit approvers
- Loan/credit review staffs
- Business Development Representatives
- Branch Managers
- Business Credit Analysts
- Risk Managers of Real Estate companies and FIs
- Accountants and Auditors
Dev serves as an instructor in the ABA’s Stonier Graduate School of Banking, the Southwestern Graduate School of Banking, the Pacific Coast Banking School, and the American Bankers Association's (ABA) Commercial Lending. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA.
Dev has written about credit risk management, financial analysis and related subjects for the ABA's Commercial Insights, the Risk Management Association's RMA Journal, and other business professional journals. He is the author of Analyzing Construction Contractors and its related RMA workshop. A past national chair of RMA and former Florida Chapter president, Dev serves as a member of the RMA Journal's advisory board, and an ex-officio board member of the Florida and Atlanta RMA chapters. He also serves on the advisory board of the Atlanta Chapter of the Professional Risk Managers' International Association (PRMIA), and he has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department's Financial Service Volunteer Corps (FSVC)