Analysis of Financial Risk

By the end of the programme, students will have a clear understanding of :

• The Income Statement as regards lending to the future
• Statement of Financial Position terminology in small to medium business
  • Fully understand the concept of Reserves and how they should be analysed for credit purposes
  • Director’s Loan Accounts and the risks to banks
  • Cession or Subordination?
  • Capital structure (Overview)
• Basic understanding of cash flows
  • Operating Activities
  • Investing Activities
  • Financing Activities
• Understanding the business using Business Flow Analysis
  • Preparing a Business Flow Analysis 
  • Importance of understanding the business
  • Inputs, processes and outputs
  • 5 reasons to use Business Flow to understand the business
• Learn how to use liquidity ratios to understand cash flows
• Use gap analysis as well as trend analysis in interpreting ratios
• Understand the importance of sustainable growth 
• Know the potential benefits of gearing and how to lend to a highly geared business
• Determine profitability rather than focusing on historical profit
• Fully understand the concept of Sustainable Growth and how to calculate the Sustainable Growth Rate of a business
• Analyse the Sustainable Growth Rate and compare to projected growth to predict potential problems in the future
• Use sustainable growth ratios to manage cash flow forecasts
• Focus on the critical success factors of business survival and thus vastly improve their business risk analysis
• Analysing financial risk in business through comprehensive ratio analysis
  • Liquidity and Cash Flow
  • Gearing
  • Profitability
  • Activity