greater of $300 per participant per day or
fixed daily fee
Overview
This two-day seminar is for all credit analysts and lenders who could benefit from a focused review of the analytical areas in commercial business and commercial real estate lending that require the greatest attention in a difficult economic environment since analytical mistakes in these areas may result in subsequent and severe loan performance problems.
Explore the purpose and role of distributions and loans to shareholders and the necessary adjustments to reported profit necessary in arriving at actual business profit and associated debt service prospects;
Examine the differences between net income + depreciation, EBITDA, and Uniform Credit Analysis (UCA) cash flow in providing messages and signals about borrowing causes, financing requirements, cash sources of debt service, and shifts in a borrower’s risk profile;
Address the dangers inherent in combining business cash flow with personal cash flow in developing support for marginal credits, assessing debt service prospects, and attempting to properly assess risk;
Explore the analytical deficiencies in the information content of cash based business income tax returns and understand the necessity of complementing business income tax returns with accrual financial statements;
Review the importance of an income producing property’s net operating income as the primary source of debt service rather than shifting focus to market value as the underlying rationale for the credit decision;
Identify the relevant balance sheet accounts, and personal financial statement information, that provide the information necessary to trace movements in cash between related companies and their owners;
Review and examine information in the cash flow computations and UCA cash flow statements to understand and identify the likely reasons for pressure on future cash flows individually by company and collectively by related companies and their common owner; and
Use the historical information in the cash flow computations and UCA cash flow statements to understand the implications about future debt service for a single borrower within the group of related companies and determine if the related company cash flow pressures would benefit or impede the borrower’s ability to properly service its interest-bearing debt.
Seminar
Materials
Credit Refresher on A Cash Flow Snapshot
Credit Refresher on Accounting Profit and Business Profit
Credit Refresher on Cash Based Income Tax Returns
Credit Refresher on Distributions and Income Taxes
Credit Refresher on Global Cash Flow
Credit Refresher on Net Operating Income or Market Value?
Credit Refresher on Refinancing and the Cap Rate
Credit Refresher on Related Party Transactions
Credit Refresher on The Income Capitalization Approach
Financial Statements for Total Coverage, Inc.
Excerpts from Carter Park Mills Form 1065
Excerpts from Adobe Plaza Appraisal Report
Financial Statement Excerpts for Clovis Supply, Fresno Properties, Modesto Services, and Sequoia Properties
Modified UCA Cash Flow Statements for Clovis Supply, Fresno Properties, Modesto Services, and Sequoia Properties
Personal Financial Statements for Fritz Schumacher
Exercises
Solutions
Optional Online Proficiency Exam
Upon
Completion
Participants who closely follow the instructor’s presentation and carefully review the written solutions will be able to:
Understand the purpose and role of distributions and loans to shareholders and the necessary adjustments to reported profit necessary in arriving at actual business profit and associated debt service prospects;
Understand the differences between net income + depreciation, EBITDA, and Uniform Credit Analysis (UCA) cash flow in providing messages and signals about borrowing causes, financing requirements, cash sources of debt service, and shifts in a borrower’s risk profile;
Understand the dangers inherent in combining business cash flow with personal cash flow in developing support for marginal credits, assessing debt service prospects, and attempting to properly assess risk;
Understand the analytical deficiencies in the information content of cash based business income tax returns and the necessity of complementing business income tax returns with accrual financial statements;
Understand the importance of an income producing property’s net operating income as the primary source of debt service rather than shifting focus to market value as the underlying rationale for the credit decision;
Understand which balance sheet accounts, and personal financial statement information, provide the information necessary to trace movements in cash between related companies and their owners;
Understand information in the cash flow computations and UCA cash flow statements that identify the likely reasons for pressure on future cash flows individually by company and collectively by related companies and their common owner; and
nderstand how to use the historical information in the cash flow computations and UCA cash flow statements to identify future debt service implications for a single borrower within the group of related companies and determine if the related company cash flow pressures would benefit or impede the borrower’s ability to properly service its interest-bearing debt.
Contact Us for information about scheduling an on-site Seminar.
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