Advanced Credit Assessment in Practice

  On completion of this programme, the following outcomes will be achieved:

• Ability to analyse the cash flows of the business and fully understand each element of the cash flow statement
  • Looking at Cash Flows in more detail
  • Cash receipts from customers
  • Cash Payments to Suppliers and Employees
  • Investing Activities
  • Financing Activities
• Perform a non-financial risk analysis focusing on all the internal and external risks of the business
• Understand the objectives of business and why sustainable growth, and not profitability, should be the focus of attention
• Determine why companies borrow money and what factors should businessmen consider when deciding on different methods of financing their business
• Understand the cost of financing and why equity financing is so much more expensive than debt financing
• How should a business determine the viability of long-term projects and why is the weighted average cost of capital a critical determinant. This will include an understanding of the different methods of discounting future cash flows to present values to assess the feasibility on longer term lending
• How a business develops a budget and the link between budgets and cash flow forecasts. How should a banker manage forecasts provided by clients. 
• Discuss the problems facing businesses in trying to reach an ideal level of working capital.  This module will focus on the trade-off between profit and cash flow, daily working capital management decisions, the problems of symptoms and causes, and the link between liquidity and cash flow. This will relate back to the financial ratios the bank uses to understand the liquidity of a business for risk purposes.
• Consider the motives as to why companies window dress financial information. Dressing can take place upwards and downwards, making the information either better or worse than the true situation. Consider the different methods of window dressing and understand how to deal with the problem and motivate a lending proposal when assessing financial risk.
• Link all above to financial risk analysis
• Understand pricing. This relates not only to pricing for risk, but also understanding the difference between nominal and effective interest rates. There are very few bankers who understand the relationship between a nominal and an effective interest rate and are therefore unable to explain this to a client when he is charged a NACM rate and queries the amount.
• Use the information provided on the programme in preparing motivations for lending to Credit Division, ensuring maximum approvals with minimum re-works. Learners will be introduced to CredAssist, a programme they will be able to take back to their workplace for a limited period. This programme assists the learner in bringing all the content of the training back into the workplace and implementing to their actual tasks in the bank.