Commercial Business Underwriting

...credit analysis for good and bad times

Commercial Business Underwriting steps through the entire analytical process for a commercial credit decision. At the end of the eight online sessions, participants will know precisely how to sort through and analyze company background information and financial statements, assess management and the competitive environment in which it operates, project likely financial performance, identify sources of cash to meet debt service, identify risks to those cash sources, consider covenants to mitigate the risks, and present their conclusions and recommendations in a generic credit write-up format.

Target Audience

Analysts and lenders interested in exploring and mastering the analytical tools essential in identifying and assessing a commercial borrower's prospects for meeting its interest-bearing debt service.

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Description
1. Analytical Decision Tree and the Credit Write-Up
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Currently there are no live presentations on the calendar.
Recording

4.56 (1238 reviews)
... four essentials you shouldn't forget
In the first webinar session, participants identify the four essential issues that must be addressed in every credit write-up and explore the sequential analytical steps in the credit decision process. They examine the financial statements for a prospective borrower, assess interview comments by a second prospective borrower, explore the personal characteristics necessary for business success, and identify the generic sources of competitive advantage for a business.
2. Financial Statement Review and Ratio Analysis
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Thu. 10/6Recording

4.60 (757 reviews)
... not all ratios are equal
In the second webinar session, participants examine a borrower's financial statements to identify risk issues. They calculate and interpret key performance ratios to develop an assessment of borrower financial status and shifts in its risk profile, assess likely cash flow performance and identify the borrower's likely source of cash to service interest- bearing debt, and determine how well or poorly management controlled the Business Drivers in the last historical period.
3. Cash Flow Analysis and Borrowing Causes
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Thu. 10/13Recording

4.63 (512 reviews)
... happiness is truly positive cash flow
In the third webinar session, participants review and identify the financial documents and information necessary to manually construct a UCA cash flow statement. They engage in the actual manual construction of a UCA cash flow statement and use the resulting statement to identify the borrowing causes, the source of cash to service interest-bearing debt, the cash impact of related party transactions, the financing requirement, and the sources of cash to satisfy the financing requirement. In addition they identify the implications for future cash flow problems and likely debt service difficulties, if any, from messages that emerge from the construction and review of the UCA cash flow statement.
4. Management Assessment, Projected Cash Flow, and the First Way Out
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Thu. 10/20Recording

4.52 (194 reviews)
... management makes it happen
In the fourth webinar session, participants review the competitive forces at work that management must influence and control to assure sufficient profit and cash flow in servicing interest-bearing debt. Based on all the information at their disposal and an assessment of management competence, they identify the most likely projection values for the Business Drivers. They manually create a projected UCA cash flow statement using a Cash Flow Snapshot worksheet to translate projection assumptions to results. Based on the projected performance, participants identify the likely future sources of cash to service interest-bearing debt, given the loan request and associated debt service requirements.
5. Guarantor Analysis and the Second Way Out
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Thu. 10/27Recording

4.60 (221 reviews)
... ready cash is everything
In the fifth webinar session, participants construct a personal cash flow statement from personal financial statement and personal income tax return information. In so doing, they identify the areas of greatest uncertainty about the validity of financial information used in the construction process and assess the implications for the accuracy and validity of the completed personal cash flow statement. Based on the resulting cash flow statement, participants estimate the amount of personal cash flow available to support business debt service in good times and in a cash flow crisis. In addition, they estimate the amount of ready cash support from the guarantor in a business cash flow crisis and explore the benefits and limitations of applying global cash flow techniques in reaching a credit decision.
6. Non-Financial Red Flags and Performance Implications
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Thu. 11/3Recording

4.65 (160 reviews)
... Today's non-financial red flag may be tomorrow's financial disaster
In the sixth webinar session, participants explore the distinction between financial and non-financial red flags. They review and assess the significance of numerous non-financial red flags that borrowers frequently encounter. They examine specific financial statement information, borrower background information, and borrower comments to identify non-financial red flags and trace their existing and potential impact on borrowing causes, cash sources of repayment, and risks to cash repayment sources. In addition, participants explore possible mitigants that may be put in place to limit the risks from non-financial red flags.
7. Identifying and Mitigating Repayment Risks
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Thu. 11/10Recording

4.56 (105 reviews)
... a little support may be very useful
In the seventh session, participants identify relevant financial and non-financial risks to the primary, secondary, and tertiary cash sources of repayment. They examine a range of possible risk mitigants from possible self-regulating risk mitigants implemented by the borrower to mitigants imposed by the lender in the form of debt service covenants and associated limitations on cash outflows. They explore and assess the value of the financing gap ratio designed to control cash outflows from movements in operating balance sheet accounts such as receivables, inventory, payables, and accruals. In addition, participants address the benefits and limitations of covenants if properly constructed and monitored.
8. The Credit Write-Up Again
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Thu. 11/17Recording

4.59 (220 reviews)
... back to four unforgettable essentials
In the eighth and final webinar session, participants review the essential analytical issues that must be addressed in a credit write-up. They present the elements of a credit write-up for two specific borrowers, which, based on all prior analysis, identifies and highlights the borrowing causes, the likely sources of repayment that range from business cash flow to liquidation of business and guarantor assets, relevant risks to each source of repayment, and practical mitigants to those risks sufficient to conform to the lender's level of risk tolerance.