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
LDP 5.1 – Cash Flow Statements and Their Formats
LDP 5.2 – Analyzing Cash Flow
LDP 5.3 – Debt Service Coverage Measures
*Only available as a series
What You’ll Learn
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
After completing this series, students will be able to: