Creating a risk culture
The objective of the Corporate Financial Analysis & Credit Risk training is not only to provide the delegates with a better understanding of the key principles of corporate risk but also to help them to analyse and react to corporate risks. All courses are interactive and are taught via case studies. The attendants will be encouraged to express their own credit risk opinion.
The financial and non-financial risk analysis key principles will not be viewed in an academic manner but through discussion, dialogue and case studies. It will help the attendants to freely express their thoughts, to analyse the risks by themselves, to utilize their brain, their experience and their common sense to react to credit issues.
Techniques and academic knowledge are important but useless if they are not used to quantify the credit risks and decide whether or not the risk is acceptable to the bank. The attendants will be encouraged to focus on the essential credit risk issue: is the risk acceptable for the bank and is the bank really going to be repaid?
Programme
This programme is not only targeted for credit “specialists” but should be of interest to the professionals who directly or indirectly are involved in the bank taking a credit risk.
This programme is an « à la carte menu ». Your teams have varying priorities: some may have already mastered accounting but struggle with budget management, while others may require a comprehensive refresher. The course will be customised to your challenges.
The duration, ideally 5 days, can vary depending on your needs from 2 up to 10 days.
The course will be interactive. Case studies will enlighten the risk analysis and the credit approach.
Introduction
The programmes will offer a comprehensive approach to credit and risks.
The following questions will be addressed:
- Who is the counterparty of the credit?
- What is the purpose of the credit?
- How do we get repaid? (Cash Flow, Sale of Asset, Refinancing)
The courses will focus on the risks issues in order to decide whether or not the credit is acceptable to the bank and whether mitigation measures are required.
Non-financial risk analysis
Macro / Environment
-Business / Sector
-Position / Peers
-Strategy (BCG, McKinsey…)
-SWOT
-Management
Financial risk analysis: balance sheet
The Assets (fixed assets, intangibles…)
-Funding structure/ Liabilities and Net Worth:
*Working Capital / Working Investment, Liquidity
*Debt (ST/LT, Senior/Junior…)
*Debt profile
*Off Balance Sheet
*Access to market, financial sources
*Tangible Net Worth
*Debt / Equity
Financial risk analysis: income statement
Revenues (recurrent, dynamics, cycle…)
-Gross profit (margin…)
-EBITDA (stability…)
-Operating profit / EBIT
-Net profit
Financial risk analysis: ratios analysis
Ratios to be analysed versus other years and peers
-P&L and Cash Flow Dynamics
-Liquidity
-B/S Debt structure
-Insolvency signals
Financial risk analysis: cash flow
-EBITDA
-Gross Operating Cash Flow
-Working Investment changes / Cash cycle
-Net Operating Cash Flow
-CAPEX
-Debt repayments / Lease expenses
-Free Cash Flow after debt service
-Discretionary CAPEX & acquisitions
-Changes in ST & Lt Debt and Finance Lease
-Changes in Equity / Dividends…
-Exceptional/ Extraordinary items & Others
-Net change in Cash
Financial risk analysis: debt capacity
-Weaknesses of the financial ratios
-The Free Cash Flow for Debt and Equity Holders
-Net Present Value of the Free Cash Flows
-Debt Capacity: tool helping for maximum amount, time for repayment
Financial risk analysis: forecasting
-How to build up P&L, Cash Flow and B/S model
-Company forecast
-Banking case and downside stress cases
-Debt Capacity
Structuring and risk mitigation
-The counterparty
-Ranking of the debt
-Debt profile
-Covenants
-Guarantees
-Pricing, risk return, the different markets (loan, bond, CDS…)