Credit (Risk) Analysis is one of the most important functions performed by banks. Because interest and fee income from loans represent the largest source of revenue for banks, thorough credit analysis must be performed before loans are approved and funded.
Credit Analysis starts with spreading historical financial statements and then calculating key ratios to determine the financial health of an organization. Learn the five vital signs of any organization and the ratios required to identify the signs. A detailed identification and definition of ratios will be included.
o Current / Quick Ratios
o Working Capital Analysis
o Defensive Interval Ratio
o Activity Ratios for Working Capital Assets
o Activity Ratios for Working Capital Liabilities
o Ratios to Measure the Proportion of Support Provided by Owners and Creditors
· Asset Management
o To Measure the Ability of Management to Use Assets to Generate Sales and Profits
o Performance Ratios to Measure the Relationship among Sales, Costs and Expenses, and How their Changes Affect the Bottom Line
· Cash Flow
o Uniform Cash Analysis to Determine Sources and Uses of a Firm's Cash as a Means of Serving Long-Term Debt
Leave with a deeper understanding of ratio and credit analyses during the underwriting process. This translates into well-organized, clearly written credit memoranda so you'll be more confident explaining trends and the financial impact on customers and prospects.