Series 6: Using Financial Projections to Fine Tune the Credit Analysis
Course Number: RMA6
Course Code: ABA 171F
Constructing and analyzing financial projections to interpret future ability to repay debt, identify the most appropriate type of loan, and to evaluate margins of protection in the event of changes in business, industry or management risks.
LDP 6.1 – Using Pro Forma Balance Sheets to Interpret Short-Term Repayment Ability
LDP 6.2 – Preparing and Interpreting Annual Financial Projections
LDP 6.3 – Using Projections to Help Determine Appropriate Loan Type
After completing this course, students will be able to:
– Explain the benefits of using financial projections in a credit analysis
– Prepare a pro forma monthly balance sheet to evaluate peak borrowing needs based on a company’s cash budget and projected monthly income statements
– Prepare an annual financial projection
– Interpret the ability to repay debt given assumptions about cash flow drivers and other variables
– Interpret loan types based on projected borrowing needs and repayment sources
– Determine an appropriate repayment schedule for long-term loans
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