Explores the cash flows among and between related companies with common ownership and among and between the companies and the owners and identifies likely pressures on future cash flows and debt service capabilities by reference to two related companies engaged in restaurant management and real estate development.
Understand and appreciate the information requirements necessary to identify cash flow movements between related companies with common ownership;.
Identify the relevant balance sheet accounts that provide the necessary information to trace movements in cash between related companies and their owners;
Understand the messages provided by global cash flow computations about cash cows and cash hogs among the related companies and their owners;
Verify or refute the initial messages about cash cows and cash hogs by reference to modified UCA cash flow statements for each related company;
Use the information in the cash flow computations and UCA cash flow statements to understand and identify the likely reasons for pressure on future cash flows; and
Use the information in the cash flow computations and UCA cash flow statements to understand the implications about future debt service for one or more of the related parties.
Course
Materials
Credit Refresher on Related Party Transactions
Presentations Slides
Online
Closure Questions
Upon
Completion
Participants who successfully
complete the workshop will
be able to:
Identify the business forces that drive and determine changes in working capital;
Identify the specific reasons for working capital changes over a two-year horizon for a real estate developer;
Assess the messages provided by the underlying reasons for changes in working capital about the likely source of cash to service interest-bearing debt;
Explore the confirming or conflicting messages about the likely source of cash to service interest-bearing debt provided by the Uniform Credit Analysis (UCA) cash flow statement.
Understand how to precisely identify the source or sources of cash to service interest-bearing debt by proper assessment of information in the UCA cash flow statement; and
Understand and appreciate the linkage between working capital analysis and cash flow analysis in fully understanding the source of cash to service interest-bearing debt.
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