Basic Cash Flow

This webinar will examine business cash flow, the ways in which to calculate it, and its importance in the credit risk analysis process. Participants will learn how to calculate cash flow from information contained in the Profit and Loss Statements of Businesses and the tax returns that a business generates. In addition to calculating simple cash flow which relies on Profit and Loss Statement information, participants in this webinar will look beyond the P & L to the balance sheet of businesses and the ways in which changes in the components of the balance sheet impact the cash flow of a business and its ability to service debt.  

Adequate Cash flow is necessary for any business to survive. A business with inadequate cash flow will likely not be able to pay its bills, including those to its lenders. As a result of attending this webinar, participants will gain a better understanding of businesses that will generate enough cash flow to service their debts as compared to those that will not.

WHY SHOULD YOU ATTEND

Many lenders to businesses are not certain about lending money because they fear failure and want to minimize risk. Although minimizing risk is part of the lending process, proactive lending requires certainty on the part of the lender that the decisions that they make will not result in bad credit loans. One of the purposes of this webinar is to build confidence and knowledge so that lenders can make better decisions. 

Any lender who wants to build his (her) portfolio while minimizing risk will benefit from attending this webinar.

AREAS COVERED

Determining the ability of a business entity to generate cash flow is essential whenever the repayment of a loan is considered. Cash flow analysis measures the ability of a business to generate sufficient cash to operate the business and have enough excess cash to service its annual debt service requirements. Understanding how to calculate and interpret cash flow is essential for successful financial institution employees who want to be able to answer the question of repayment ability.

This webinar is designed to assist financial institution employees in calculating cash flow utilizing a number of different methods.   The webinar will initially define cash flow and identify typical sources and uses of cash of a business.

• Comparison of the Traditional Cash Flow Method (Net Income + Depreciation + Interest divided by Annual Debt Service) to determine a Debt Service Coverage Ratio (DSCR)
• Ways in which changes on the balance sheet income statement of a business can positively (or negatively) affect the cash flow of a business. 

Upon completion of this webinar, the participants will have a better understanding of how cash flow is calculated and more importantly, how to interpret its meaning.

LEARNING OBJECTIVES

• Understand the ways in which to calculate simple cash flow 
• Recognize the types of businesses for which this calculation is appropriate
• Learn about the balance sheet and the common items in a balance Sheet which impact cash flow

WHO WILL BENEFIT

The following individuals or disciplines will benefit from attending this Webinar:

• Relationship Managers
• Credit Analysts
• Commercial Loan Officers
• Members of Loan Committees
• Loan Review Personnel