The primary tenant of this course is the protection of the primary and secondary sources of repayment. An appropriate loan structure goes well beyond the loan type (Seasonal, Permanent Working Capital, Term & Bridge Loans); it involves the integration of loan type, amortization schedules, covenants and collateral/guarantees which together create a “structure” that matches the appropriate loan type to the borrower’s needs, protects the primary source of repayment and ensures value in the secondary sources when necessary.
Sources of Repayment
This course focuses on the determination and evaluation of the strength of acceptable Primary Sources of Repayment (PSR) (such as Net Cash Flow after Operations, Seasonal Conversion of A/R and Inventory, among others) by considering the “scale” and “predictability.” It identifies and prioritizes the Secondary Sources of Repayment (SSR) by considering scale, predictability, liquidity, and interdependence of the PSR.
Cash Flow Analysis
This course introduces the cash flow analysis necessary to analyze if a company has the capacity to service interest and principal payments, as well as to cover its capital expenditures. It explains the underlying causes of changes in cash flow within a company and interprets the meaning of some of the most widely used cash flow coverage ratios (Debt Service and Fixed Charge Coverage ratios).
Cash Flow Construction
This foundational course introduces the cash flow construction skills to understand how a business generates and uses cash. The construction of the three different cash flow presentations: FASB 95, Uniform Credit Analysis (UCA), and EBITDA approach are explained, and a practical case is used to construct a UCA cash flow statement from a company’s financial information.
Cash Flow Forecasting
The purpose of the course is to move forecasting from a number massaging exercise into the creation of a “Most Likely Case” scenario within a range of probable performance scenarios. The course builds the skills necessary to identify and assess the sources of repayment, identifies key credit risks and mitigating factors, and creates sensitivity forecasts that incorporate risk analysis.