Cash Flow and Debt Service

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Cash Flow and Debt Service
what really happened?

Target Audience

This short training course is for both relatively new analysts and lenders as well as for experienced analyst and lenders who need to refresh their understanding of the difference between net income + depreciation and an actual operating cash flow statement. The course emphasizes the critical messages provided by an operating cash flow statement and cautions against unknowingly engaging in survival financing. It reviews the necessary conditions for business success and illustrates the trap of falsely assuming proper debt service by reading the wrong risk signals

2 CEUs

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Course Objectives:

	Explore the benefits and limitations of traditional cash flow – net income + depreciation – and examine the messages about borrower performance provided by traditional cash flow.
	Construct an operating cash flow statement from selected financial information and, in the process, explore the role of distributions and loans to shareholders in the operations of a business and their impact on business cash income.
	Identify the borrowing cause or causes by reference to the operating cash flow statement and compare the borrowing causes with those identified via traditional cash flow.
	Probe and determine the messages provided by an operating cash flow statement about debt service, financing requirements, and borrower risk.
	Examine the two best measures of conditions for business success and explore the use of the Risk Grid in establishing risk profiles and movements in those profiles.
	Use the Risk Grid to compare and contrast the essential messages about risk from traditional cash flow and from the operating cash flow statement, as well as appreciate the implications for inadvertently financing borrower survival.

Course Materials

	Credit Refresher on A Cash Flow Snapshot
	Financial Statements for Flooring Designs, Inc.
	Online Quick Quizzes
	Online Closure Questions

Upon Completion

Participants who successfully complete the workshop will be able to:

	Thoroughly understand the benefits and limitations of traditional cash flow, as well as appreciate messages about borrower performance that are, and are not, provided by traditional cash flow.
	Understand how to quickly construct an operating cash flow statement from selected financial information, as well as understand the role of distributions and loans to shareholders in the operations of a business and how they impact business cash income.
	Identify the borrowing cause or causes by reference to the operating cash flow statement and understand how those borrowing causes may differ from those suggested by traditional cash flow.
	Clearly identify the messages provided by an operating cash flow statement about debt service, financing requirements, and borrower risk.
	Understand the two best measures of conditions for business success and apply the Risk Grid in establishing risk profiles and charting movements in those profiles.
	Understand how to quickly use the Risk Grid to compare and contrast the essential messages about risk from traditional cash flow and from the operating cash flow statement, as well as fully understand and appreciate the implications for inadvertently financing borrower survival.

How to Order

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Quick Hits
	Business Income Tax Returns
	Business Profit and Debt Service
	Cash Flow and Debt Service
	The Income Capitalization Approach