Building on the qualitative disciplines established in the Business Risk Analysis program, this Financial Statement Analysis program provides the Business and Community banker with the ability to identify and calculate the key income statement and balance sheet measurements used to quantify the client’s business profile.
Particular attention will be given to:
- Cash Flow Drivers: Identification of the key accounting measurements from the income statement and balance sheet which the banker should select in measuring quantitatively the company’s financial performance
- Income Statement - Operating Performance Analysis: a review of the revenue growth, gross margin, EBITDA margin, operating margin, and net margin, and how such measurements should be incorporated into the bank’s credit analysis internally and customer discussions externally
- Income Statement - Debt Servicing Analysis: A review of the key metrics used by banks to determine the business and community banking client’s ability to service its debt using debt service coverage, fixed charge coverage and debt/EBITDA multiples.
- Balance Sheet – Liquidity Analysis: a review of key liquidity measurements such as current and quick ratios and working capital
- Balance Sheet Efficiency: a review of the key asset utilization measurement or ‘swing factors’ particularly accounts receivable, inventory and accounts payable, and days outstanding
- Balance Sheet – Leverage Analysis: a review of such key measurements such as assets/equity, liabilities/equity, funded debt/equity, and funded debt/EBITDA
Using practical case examples and standard bank financial statement spreading systems, the program is designed to enable participants to calculate the key ratios used in financial statement analysis and to draw the appropriate analytical conclusions. In addition, the program will also incorporate practical exercises enabling participants to see how such analysis is incorporated into a business or community bank’s credit write-up when analyzing SME customers.