Analysing the Financial Statement of Commercial Borrowers

Program Description

RATIONALE

An understanding of financial statements is critical to analyzing the credit quality of a borrowing customer.

•  It facilitates the Relationship manager and credit analysts’ ability to ask the right questions during information gathering meetings with the borrower.
• It helps the banker to understand the key drivers of the customer’s business.
• It helps the banker to understand the key financial risks a business is exposed to and how these risks are mitigated.
• Identify emerging problems which can be detrimental to repayment of existing facilities.
• Identify opportunities for doing additional business with the customer which may not necessarily be to lend money.

COURSE CONTENTS

• An Introduction

            The Importance of Financial Statements

            An overview of IFRS

            Types of Financial Statements Formats

• Analysis – Business and Operating Performance

            Balance Sheet structure

            Operating Performance and the Business Cycle

            Assessing the Quality and Stability of Earnings

• Analysis – Assets

            Asset Structure

            Assets Valuations

            Asset Efficiency

            Working Capital

• Analysis – Liabilities and Capital Structure.

            Short-Term Liabilities & Spontaneous Funding

            Long Term Debt & Debt Servicing Capacity

            Accounting for Contingent Liabilities

            Liquidity and Solvency

            Tax, Provisions & Dividends

            Capital Structure, Leverage & Funding Strategies

            Analysis – Identifying “Red Flags” and Risk Factors in Financial Statements

LEARNING OBJECTIVES

The core objective of the course is to equip the participant with financial statement analytical skills. This course looks at the structure of Financial Statements which bankers use to evaluate the health of their prospects and customers, namely:

• The Balance Sheet,
• The Profit & Loss Statement
• The Historical Cash Flow Statement

By the end of the course, Participants should be able to:

Have appreciation of the components of financial statements and their significance.

Undertake ‘Common-size’ and Trend analysis and interpret the results

Perform peer analysis - compare customer’s business to similar businesses in the industry.

Construct, analyse and interpret key financial ratios - liquidity, capital structure, profitability, repayment & efficiency ratios

 Demonstrate an understanding of how events in both the external and internal environments of a business influence the financial statements.

Analysing the Financial Statement of Commercial Borrowers

Duration: 3 days

Skill Level: Intermediate

Delivery Mode: In-person

Month: March