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Cash Flow Analysis of Borrower’s Repayment Ability
Upon completion of this webinar, the participant will have a good understanding of how cash flow is calculated and more importantly, how to interpret its meaning.Specific areas that will be covered include:
- An explanation of how Cash Flow Analysis relies on the conversion of an Accrual Basis Financial Statement into a Statement of Cash Flow (or Cash Basis Statement) because loans are repaid with cash and not profits
- Review of the Rules of Cash Flow in determining how much cash is generated from items on the balance sheet
- Global Cash Flow Analysis Methodology utilizing financial statements, tax returns and credit reports of commercial borrowers and individuals
- Comparison of operating cash flow to the more inaccurate traditional cash flow (profits plus decpreciation) and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) method of determining cash flow
- A free cash flow method which can convert EBITDA into operating cash flow
Overview of the webinar
Understand the Importance of Cash Flow to Bankers, How to calculate it and what its Uses are.
As a banker, you need to interpret cash flow and calculate it accurately to pitch a stellar success. This session is designed to assist you as a banker in calculating cash flow from operations and help you to calculate Global Cash Flow Analysis for those entities that must rely on excess cash generated by their owners to service the business entity’s commercial debt.
The webinar will explain how the cash flow statement is derived from the balance sheet and the income statement, and then it will describe its three component cash flow activities—operating, financing, and investing. By the end of the session, you will see how cash flow is incorporated into the analysis and underwriting of a business borrower.
Who should attend?
- Commercial Loan Officers
- Credit approvers
- Loan/credit review staffs
- Business Development Representatives
- Branch Managers
- Business Credit Analysts
- Risk Managers of Real Estate companies and FIs
- Accountants and Auditors
Why should you attend?
There is an old saying in credit analysis, “Borrowers pay back loans from cash flow, not profits.” But it is not just cash flow; it is cash flow from operations that is the most desirable source of repayment because it is generated by a borrower managing its working capital assets and earning a sustainable profit. This webinar will explain the difference between profits and cash flow as well as cash flow from operations vs. cash flow from financing and investing activities. After all, borrowing from another lender or liquidating fixed assets to pay you back ultimately hurts the long-term viability of the borrower.
Faculty - Mr.Dev Strischek
A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek is principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC). PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are more appropriate for privately held firms. He also serves as the PCC’s representative to FASB’s Credit Losses Transition Resource Group supporting the new current expected credit loss (CECL) standard. Dev is the former SVP and senior credit policy officer at SunTrust Bank, Atlanta. He was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management.