1. Course Content

1. MINDSET

i. Intent
ii. Classification
iii. Pricing
iv. Fit

2. UNDERSTANDING THE LANGUAGE

i. Capital Structure
ii. Debt (Leverage)

• Why is leverage important?

iii. Maturity
iv. Default
v. Interest
vi. Commitment Fees
vii. Credit Culture

• Credit risk

viii. Liquidation costs
ix. Creditworthiness
x. Work-out and Charge off
xi. Owners’ Equity
xii. Bankruptcy
xiii. Stakeholders
xiv. Credit Limit
xv. Syndicate
xvi. Basis Points
xvii. Collateral

3. WHY DO BUSINESSES BORROW MONEY?

i. Why does the firm need money, and what is it going to do with it?
ii. Why is the firm borrowing money?
iii. Sources of Repayment

4. LENDING PRODUCTS

i. Line of Credit
ii. Revolving Credit
iii. Bills discounting
iv. Term loans
v. Consumer Loans
vi. Trade credit
vii. Bonds

5. REVIEW

i. Credit Risk & Credit Analysis

• Why is credit analysis important?

ii. Credit Risk and Credit Spreads

iii. Credit Analysis Process

• Setting Objectives and guidelines
• Gathering information
• Processing information
• Presenting information
• Decision-making
• Documentation

6. CREDIT CULTURE AND INFORMATION GATHERING FOUNDATIONS

i. Information Gathering – Foundations

• Business – Need & Risk
• Repayment Sources
• Industry Profile
• Management & Track Record

7. INFORMATION GATHERING AND PROCESSING

i. Information Gathering – Data

• Exhibit One – Balance Sheet
• Exhibit Two – Income Statement
• Exhibit Three – Free Cash Flows
• Exhibit Four – Pre Formatted Financial Analysis

ii. Information Processing

• Pre Processing
• Preparation of Credit Memorandum

8. THE CREDIT DECISION

i. Accept / Reject
ii. Term Sheets
iii. Loan Pricing
iv. Compliance & Documentation

9. CREDIT DECISION – FACTORS

i. Industry Analysis
ii. Business Analysis – Other Qualitative Factors

• Business Factors
• Business Risk
• Management/ Ownership Quality

iii. Credit Rating Agencies
iv. Importance of Cash Flow Analysis in Credit Analysis
v. Cash Flow Statements

• Operating Activities
• Financing activities
• Investing activities

10. ANALYZING CASH FLOW STATEMENTS: EXAMPLES

• Example 1- Office Depot
• Example 2 – Will and Can Inc
• Consistency
• Seasonality or Cyclicality of Cash Flows

EXCEL Examples

No

2. Introduction

While the Credit Analysis course started the discussion on financial and operating leverage and the thinking behind the borrowing decision, the Credit Process course focuses on the lending side of the equation.

3. Buy this course

To buy this or any other course, check out the finance course store.