Day 2

The Commercial Financial Analysis series continues with training on how to use and properly interpret the key quantitative tools of financial analysis.  Special emphasis in the seminar is devoted to analyzing a Commercial & Industrial (C & I) loan.  Working within a case study, attendees calculate & analyze the financial ratios, cash flow coverage and working capital requirements of a commercial borrower.  Attendees learn how to derive cash flow from the federal tax return and related schedules of an S Corporation.

Key Topics

• Analyzing Financial Ratios
• Cash Flow Coverage Analysis
• Estimating Working Capital Requirements
• S-Corporation Tax Return Analysis
• Evaluating & Determining Eligible Receivables
• Evaluating & Determining Eligible Inventory



Case Study
We analyze a loan request for an owner occupied commercial real estate loan and a working capital line of credit.  Attendees learn how an analyst/lender would obtain, process, and analyze financial information. 

We discover how to generate a set of key questions and determine the primary strengths and weaknesses of the borrower.

Financial Ratios

Participants learn how to calculate and properly interpret the borrower's key financial ratios covering profitability, liquidity, leverage, and debt service coverage, including,

• Return on Sales
• Return on Equity
• Return on Assets
• Current Ratio
• Quick Ratio
• Debt to Worth
• Cash Flow to Current Maturities
• Dividend/Distribution Payout
• Average Age of Accounts Receivable
• Average Age of Accounts Payable
• Inventory Turnover
• Total Asset Turnover

Cash Flow Analysis

Using the borrower's 1120S (S Corporation) federal tax return, Schedule L, M-1, M-2 and K-1, attendees construct a cash flow statement, evaluate projections and analyze the borrower's capacity to service debt.  Emphasis given to factors that could impact the global cash flow and debt service capacity.

Working Capital Analysis

Attendees learn how to estimate the borrower's working capital requirements.  We review how to evaluate and determine eligible accounts receivable & inventory for a borrowing base.  How to review accounts payable and overall vendor credit.