Cash Flow Analysis

Course details

• The analysis roadmap
• The future versus the past
• The cash flow versus earnings
• The importance of liquidity
• The dangers of extrapolation
• The lending rationales
• Self-liquidating loans
• Asset protection lending
• Cash flow lending
• Other rationales
• The concept of risk
• Solvency risk
• Volatility risk
• Risk – identification, quantification, and structuring
• Company dynamics
• Market volatility
• Revenue volatility
• The different types of operating costs structures
• Operating leverage
• The corporate growth strategy and funding implications
• Strategic capital management
• The role of liquidity
• Crisis management of liquidity
• Role-play of managing a company in financial difficulties
• A more rational approach to capital structuring
• Common errors in an analysing liquidity
• How liquidity should be assessed
• Illiquidity versus insolvency
• The cash cycle
• The cash effect of the production cycle
• The earnings effect of the cycle
• The cause of overtrading
• The importance of working investment
• Measurement of working investment
• Ratio analysis
• The statement logic equation – key performance indicators
• Implementation of the calculations – practical exercise
• Analysis of profitability
• Analysis of efficiency
• Analysis of financing structure
• Analysis of cash flow coverages
• Comparative analysis discredited
• Cash flow analysis
• Deriving a cash flow from financial statements – practical exercise
• The importance of cash flow analysis
• When is the cash coverage adequate?
• Calculation of debt servicing capacity
• The impact of potential volatility
• Free Cash Flow – how derived and why important
• Structures to mitigate cash flow volatility
• Guidance to covenant setting
• Case study
• The rise and fall of a company through financial mismanagement
• Development and analysis of projection models
• Predictive models discredited
• Historical extrapolation discredited
• The approach required for ‘normal’ corporate credits
• The different approach required for highly-stressed financings
• The importance of the analysis worksheet
• The analytical methodologies – sensitivity, scenarios, break-even
• Problem loans
• The company’s typical behaviour with the onset of liquidity difficulties
• Detecting signs of financial stress
• Compositions of creditors
• Transactions that can be avoided