Browse Our Courses
Credit Analysis – First Course
About the course
The course focuses on the borrowing decision of an entity, in particular the impact of leverage on a business. It begins by defining what leverage is and why it is important. Next what the fixed and variable costs are and the difference between them are defined. Relevant range of production, breakeven point and margin of safety are defined and examples are used to demonstrate their calculations.
Operating and financial leverage are then elaborated on, including the degrees of leverage and the downside to each type of leverage. Finally these two leverages are combined to get the total impact of leverage. Examples are presented to illustrate the calculation of each form of leverage.
After taking this course you will be able to:
- Define what leverage is and why it is import
- Describe fixed and variable costs
- Calculate relevant range of production
- Calculate breakeven point
- Calculate margin of safety
- Define and calculate operating leverage and degree of operating leverage
- List the disadvantages of operating leverage
- Define and calculate financial leverage and degree of financial leverage
- List the disadvantages of financial leverage
- Calculate combined leverage
The candidate should be comfortable with basic mathematics and EXCEL.
This course is for beginners in the finance field.