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Financial Training Training

Financial Training

Corporate Credit Risk Analysis Programme

Variable day

This is an interactive workshop with copious use of exercises and case studies. In Module Two, delegates will use MS Excel to model cash flows of corporate and project examples.

The programme is designed as two separate modules each lasting one day. There will be a project exercise to complete between the modules to consolidate and expand the learning.

Course Agenda

Module One – Qualitative risk analysis

Overview of the credit analysis process

Objective: to establish 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

Objective: to develop 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 four Ps 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

Cashflow risk evaluation

Objective: to ensure an advanced understanding of historic cash flow analysis, forecast cash flows and the importance in financial risk evaluation

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

Case Study: Analysing corporate cash flow of a credit case and modelling projections using Excel.

Corporate capital structure

Objective: to understand 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 cash flows

Case Study: Analysing the cash flow of a project using Excel.

Current credit issues

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

Closing remarks and summary of key programme issues.

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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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