DeliverShockproof! Training Yourself, and upcoming events
Operating
Profit and Debt Capacity
paying
the owners or paying
the lenders?
Target
Audience
This
course is for all analysts
and lenders who require
advanced credit analysis
tool and techniques in assessing
risk and establishing loan
structure.
Explore
the factors that drive
and determine the amount
of short and long-term
interest-bearing debt
that a company can support
from operating profit
and cash flow;
Estimate
the dollar amount of short-term
interest-bearing debt
a company can support
from operating profit
and cash flow in the absence
of long-term interest-bearing
debt;
Estimate
the dollar amount of short-term
interest-bearing debt
a company can support
from operating profit
and cash flow for a fixed
amount of long-term interest-bearing
debt;
Estimate
the relative and absolute
dollar amount of deterioration
in operating profit that
a company can suffer before
its debt capacity falls
below interest-bearing
debt outstanding;
Examine
and identify the differences
between estimated debt
capacity and the use and
application of a borrowing
base in setting limits
to short-term debt outstanding;
and
Examine
possible loan covenants
that, if honored, would
assure a borrower has
sufficient operating profit
and cash flow to properly
service all short and
long-term interest-bearing
debt.
Course
Materials
Note on Estimating
Debt Capacity in Assessing
Risk
1999
Financial Statements for
Benson Manufacturing,
Inc.
Loan
Officer Summary for Benson
Manufacturing, Inc.
Loan
Officer Memorandum for
Benson Manufacturing,
Inc.
Selected
Risk Measures for Benson
Manufacturing, Inc.
1999 Financial Statements
for Sandover Contractors,
Inc.
Loan
Officer Summary for Sandover
Contractors, Inc.
Loan
Officer Memorandum for
Sandover Contractors,
Inc.
Selected
Risk Measures for Sandover
Contractors, Inc.
Exercise
Set (downloaded from Shockproof!
Training website)
Online
Review Quizzes
Solution
Set (downloaded from Shockproof!
Training website)
Access
to the Shockproof!
Training Resource
Center
Inclusion
in the Shockproof!
Training Discussion
Forum
Online
Credit Skills Proficiency
Exam
Upon
Completion
Participants who successfully
complete the workshop will
be able to:
Identify
the factors that determine
the debt capacity of a
company and the manner
in which changes in each
factor impact resulting
debt capacity;
Quantify
the debt capacity of a
borrower under various
conditions in which the
relationship between short
and long term debt vary
dramatically;
Estimate
the degree of stress or
deterioration in operating
profit that a borrower
could suffer before it
can no longer support
its interest-bearing debt;
Estimate
the degree of stress or
deterioration in balance
sheet management that
a borrower could suffer
before it exhausts existing
debt availability;
Identify
the relationship between
current or projected cash
flow from business operations
and underlying debt capacity;
and
Identify
the necessary elements
in a debt service covenant
that would provide maximum
assurance a borrower will
generate sufficient cash
flow from business operations
to fully service all interest-bearing
debt.
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