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Financial Training Training

Financial Training

Corporate Credit and Cash Flow Analysis

3 day

A three-day practical training programme designed to help delegates enhance their analytical skills in:

  • Evaluating the credit standing of a company
  • Understanding how cash flow analysis unlocks and demystifies information that are critical to seeing the true picture a company’s credit standing
  • Practical view of understanding corporate credit risk issues

Course Agenda


Session 1


  • Analysing corporate credit – why cash flow analysis?
  • Unlocking critical information from a company’s financial statement for corporate credit analysis

Exercise: Delegates will be introduced to the different sources of information when analysing the credit worthiness of a company by looking at the Financial Statement of a company and in the process also get an introduction to different types of lending and different methods of interpretation.

  • Setting the scene: Stages in the analysis process

Exercise: Delegates will be briefly introduced to the types and levels of risk and will look at the relationship between financial and non-financial factors.

Session 2

Non-financial analysis

  • Assessing credit risk – why non-financial information helps
  • Business evaluation models and how to use them (SWOT, PESTE, 5 Forces etc)
  • Linking non-financial and financial information

Case Study (in syndicates): Participants will use the business evaluation models covered to assess risks relating to an industrial company.

Session 3

Accounting statements and terminology

  • Rules, regulations and concepts – including IFRS
  • What income statements and balance sheets look like and what they tell you
  • Financial statements and management accounts – key similarities and differences

Exercise (in syndicates): As an introduction to this session participants will complete a short quiz to check and clarify their existing knowledge of confusing accounting terminology.

Session 4

How accounting statements fit together – the dual effect

  • Recap on what dual effect (double entry) means and why it matters for credit
  • Dual effect applied to common business transactions
  • How the income statement, balance sheet and statement of cash flows are produced

Case Study (in syndicates): Participants will identify the accounting entries for a number of different transactions and use this information to produce a simple income statement and balance sheet.


Session 1

Elementary financial analysis

  • How to identify and interpret income statement and balance sheet trends
  • Linking key items in financial statements
  • Key risk areas and early warning signs – what to look for from a credit perspective

Case Study (in syndicates): Participants will analyse income statement and balance sheet information for the case study company introduced in session one and identify key risks and opportunities for the bank.

Session 2

Key items in accounts for credit analysis

  • Creative accounting – what it is and how to spot it
  • Tangible asset accounting – depreciation, amortisation, revaluation and EBITDA
  • Asset value and liability provisions – key differences and similarities

Session 3

Analysing the notes to the financial statements

  • Important notes to statutory accounts and how they can help when performing credit analysis
  • Off balance sheet items and their significance – lease commitments, contingent liabilities etc
  • Key risk areas and early warning signs – what to look for from a credit perspective

Case Study (in syndicates): Participants will be presented with a selection of notes to a set of accounts and asked to consider their significance to a banker – this exercise will also address accounting issues covered in session one.

Session 4

Ratio and trend analysis

  • Calculating and interpreting key financial trends, percentages and ratios
  • Profitability, liquidity and gearing measures – how they are calculated and how to use them when assessing credit risk
  • What ratio trends tell you about business performance and prospects

Case Study (in syndicates): Participants will apply key ratios covered to the case study company introduced on day one.

Session 5

The statement of cash flows

  • The difference between profit and cash flow – and why it matters for credit
  • Calculating and interpreting operating cash flow using statutory accounts
  • Commonly used cash flow based ratios

Case Study (in syndicates): Participants will calculate and analyse the operating cash flow and related ratios for the case study company introduced on day one.


Module One

Qualitative risk analysis

Establishing the basic parameters of the credit risk principles:

  • Risk and return dimensions
  • Country and corporate risk issues
  • Credit default rates and risk grading
  • Fundamental principles of credit risk analysis
  • Balancing the quantitative and qualitative aspects of risk
  • A structured analysis framework for credit

Case Study: Understanding the principles of credit risk using a credit case example.

Current state of the credit market

  • Current issues regarding structured finance and credit
  • Review of changes in light of recent problems

Analysing business risks

Developing a general framework for assessing business risks over a wide range of company types and business sectors

  • Macro-environmental risk analysis; cyclical/mature/growing
  • Strategic evaluation using stakeholder analysis, four gods of management, PESTI, Porter 5 Forces model
  • Assessing competitive position
  • Resource audit using 7Ms
  • Company/product portfolio evaluation and diversification using the product portfolio BCG matrix
  • Market environment analysis
  • Generic competitive strategies
  • Strategic options using Ansoff matrix
  • Market/product lifecycle and the 4Ps of marketing
  • Value chain and peer group assessment
  • Internal operational and management assessment
  • Track record, attitude to risk, relationship with shareholders
  • Force field analysis and understanding change management issues
  • Combining the analysis using a SWOT matrix
  • Developing a qualitative analysis framework

Case Study: Identifying the business risk issues.

Module Two

Quantitative analysis

Cash flow risk evaluation

Ensuring an advanced understanding of historic cash flow analysis, forecast cash flows and the importance in financial risk evaluation

  • The dynamic cashflow cycle in a company
  • Untangling the cashflow statement
  • Linking cashflow and historic ratios
  • Evaluating repayment ability on a cashflow basis
  • Cashflow cover ratios and repayment risk, EBITDA cover, DSCR and other metrics
  • Calculating cashflows when there is no cashflow statement
  • Understanding the cashflow statements of other countries
  • Cashflow and corporate capital structure
  • Debt versus equity decisions in the capital structure and cashflow impacts
  • Cashflow sensitivity analysis – identifying the key cashflow drivers
  • Linking cashflow generation to strategy and investment decisions

Case Study: analysing corporate cashflow of a credit case and modelling projections using Excel.

Corporate capital structure

Understanding the corporate objectives in terms of alternative financing structures and to appreciate the equity viewpoint when assessing credit risk

  • Understanding optimal capital structure and risk
  • Structuring the junior/senior debt
  • Hybrid debt and equity issues in capital structure
  • Understanding the term structure of risk
  • Company cost of capital and risk components of beta
  • Company value, market value of debt and WACC
  • Using asset securitisation structures to obtain off balance finance
  • Understanding credit enhancement structures and risk transfer
  • Project finance structures in power and infrastructure finance
  • Analysing project finance cashflows

Case Study: Analysing the cashflow of a project using Excel.

Current credit issues

  • Open session to discuss current credit issues
  • Opportunity to discuss issues raised during the programme


  • Course summary
  • Feedback and Evaluation
  • Debrief

  • Course Dates & Locations

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  • In-house Training

Run this course in house and tailored to your requirements.

Call +44 (0) 500 734 734 or enquire online.

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