Description
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.
Produced by the Risk Management Association
Courses*
*Only available as a series
LDP 5.1 – Cash Flow Statements and Their FormatsLDP 5.2 – Analyzing Cash FlowLDP 5.3 – Debt Service Coverage MeasuresWhat You’ll Learn
After completing this series, 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 contractionDetermine cash flow to repay debt by answering four key questionsEvaluate cash flow quality using three testsRank cash flow quality based on the ability to repay debtIdentify and predict the demands on cash that might compromise loan repaymentCalculate and interpret profit-based debt service coverage ratiosIdentify the benefits and limitations of profit-based debt service coverage ratiosCalculate and interpret UCA cash flow-based debt service coverage ratiosOutline the benefits and limitations of UCA cash flow-based debt service coverage
