Level 2: Analyzing Business Financial Statements and Tax Returns

Description: Evaluating & Structuring Commercial Loans – Level 2: Analyzing Business Financial Statements and Tax Returns

Audience: Commercial and/or Business bankers and Credit Analysts

The courses included in the Level 2: Analyzing Business Financial Statements and Tax Returns Curriculum and their objectives are listed below:

Income Statement Analysis

  • Explain the components of revenue and cost of goods sold
  • Describe operating expenses and net profit analysis

Balance Sheet Analysis

  • Identify balance sheet considerations
  • Describe the different types of assets—current, other, and noncurrent
  • Explain the components involved in a liability and equity analysis

Ratio Analysis

  • Describe the considerations a lender needs to take into account when using ratios to evaluate financial performance
  • Identify, calculate, and interpret liquidity, financial leverage, profitability, efficiency, and debt coverage ratios
  • Explain how to use industry data when performing a ratio analysis

Cash Flow Analysis

  • Identify cash flow statements and reports
  • Describe the two dominant types of cash flow reports—indirect and direct method
  • Explain the direct method for operating activities and the importance of pro forma and cash budgets

The UCA Model

  • Compare the formats of the banker-prepared UCA cash flow model and the accountant-prepared statement of cash flows (SCF)
  • Construct a UCA model and interpret the results
  • Explain the advantages of the UCA model

Cash Budgets and Pro Forma Statements

  • Provide a description of a cash budget
  • Explain the purpose of a cash budget
  • Describe why a cash budget is a critical tool of financial statement analysis
  • Identify key financial information in the cash budget format
  • Analyze the cash budget to determine the effect on the operating cycle, working capital, and capital expenditures

Course Credits:

Duration: 6hrs:30min

Member: $150
Non-Member: $200  

ABA Library:
Commercial Lending