Series 5: Analyzing Cash Flow Statement and Measuring Long-Term Repayment Ability

Course Number: RMA5

Course Code: ABA 171E

Analyzing cash flow statements to distinguish between profit and cash flow. How to use cash flow statements and traditional debt service coverage measures to interpret cash flow repayment risks is covered.

Courses include:
LDP 5.1 – Cash Flow Statements and their Formats
LDP 5.2 – Analyzing Cash Flow
LDP 5.3 – Debt Service Coverage

Learning Obj​​​​ectives
After completing this course, students will be able to:
– Compare and contrast the three Cash Flow Statement formats in order to understand how the company generates and uses cash flow.
– Define the three types of cash flow to determine how business events are reflected on the Cash Flow Statement.
– Compare accrual and cash-based financial statements in order to differentiate between cash and non-cash events.
– Convert an accrual based statement to a cash-basis presentation to isolate cash generation or contraction
– Determine cash flow to repay debt by answering four key questions
– Evaluate cash flow quality using three tests
– Rank cash flow quality based on the ability to repay debt
– Identify and predict the demands on cash that might compromise loan repayment
– Calculate and interpret profit-based debt service coverage ratios
– Identify the benefits and limitations of profit-based debt service coverage ratios
– Calculate and interpret UCA cash flow-based debt service coverage ratios
– Outline the benefits and limitations of UCA cash flow-based debt service coverage

​The Commercial Real Estate Lending Decision Process and the courses in the curriculum are products of The Risk Management Association

Audience: Loan trainees, credit analysts, and anyone with commercial lending authority

Prerequisites: n/a

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