Evaluating Financial Condition—Liquidity, Leverage, & Solvency
October 14 2020 16:00 - 17:00 UTC
This webinar on financial condition complements “How to Assess a Borrower’s Operating Performance which explained to bankers, lenders and credit professionals how to evaluate a borrower’s operating performance—revenue generation, productivity, efficiency, and profitability--disclosed in its income statement.
In this session we move on from the income statement to the balance sheet to evaluate a borrower’s liquidity, leverage and solvency. Why? A borrower with a positive operating performance and a sound financial condition is able to generate the cash flow to repay.
- Learn how liquidity, leverage, and solvency are interrelated and how they interact with operating performance and cash flow
- Learn how to analzye and interpret internal trends in liquidity, leverage, and solvency and then compare them to industry averages to evaluate their impact on repayment ability
Topics covered in the session:
- Liquidity—borrower’s ability to meet its short-term obligations
o Current / Quick Ratios
o Working Capital Analysis
- Leverage-borrower’s ability to balance its sources of funds from creditors and owners
o Various ratios to measure the proportion of support provided by owners and creditors
o Ensuring matching of short-assets with short-term debt, long-term assets with L-T debt
- Solvency-borrower’s ability to sustain its asset base, pay its obligations, and reward its owners
o Measures for determining the ability of the firm to simultaneiously satisfy the expectations of lenders and owners while maintaining the earning assets of the firm
o Sustainable growth vs. actual growth
- Industry ratio comparisons to judge borrower’s financial condition relative to its peers
• Prerequisites: N/A • Advanced Preparations: N/A
• Course Level: Basic • Group Internet Based Training
CBANC Network is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBARegistry.org.
Assessing Borrower's Financial Condition Liquidity-Leverage-Solvency.pdfAttendees Only
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