Cash Flow Analysis of Borrower’s Repayment Ability

Cash Flow Analysis of Borrower’s Repayment Ability

  DEV STRISCHEK

  Principal

Devon Risk Advisory Group

  Product ID : DEVS-0009

  Level : Beginner

  Duration : 60 Minutes


A frequent speaker, instructor, advisor, and writer on credit risk and commercial banking topics and issues, Dev is principal of Devon Risk Advisory Group and engages in consulting, speaking and training on a wide range of risk, credit, and lending topics. As former SVP and senior credit policy officer at SunTrust Bank, Atlanta, he was responsible for developing, implementing, and administering credit policies for SunTrust's wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking, and private wealth management. He also spent three years as managing director and credit approver in SunTrust's Florida commercial lending and corporate investment banking areas, respectively. Prior to SunTrust, Dev was chief credit officer for Barnett Bank's Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, Dev's experiences outside of banking include CFO of a Honolulu construction company, combat engineer officer in the U.S. Army, and college economics instructor in Hawaii, Missouri, and Florida. A graduate of Ohio State University and the ABA Stonier Graduate School of Banking, he earned his M.B.A. from the University of Hawaii.

Dev serves as an instructor in the ABA’s Stonier Graduate School of Banking, the Southwestern Graduate School of Banking, the Pacific Coast Banking School, and the American Bankers Association's (ABA) Commercial Lending. His school, conference, and workshop audiences have included participants drawn from the ABA, RMA, OCC, Federal Reserve, FDIC, FFIEC, SBA, the Institute of Management Accountants (IMA) and the AICPA.

Dev has written about credit risk management, financial analysis and related subjects for the ABA's Commercial Insights, the Risk Management Association's RMA Journal, and other business professional journals. He is the author of Analyzing Construction Contractors and its related RMA workshop. A past national chair of RMA and former Florida Chapter president, Dev serves as a member of the RMA Journal's advisory board, and an ex-officio board member of the Florida and Atlanta RMA chapters. He also serves on the advisory board of the Atlanta Chapter of the Professional Risk Managers' International Association (PRMIA), and he has consulted on credit risk issues with banks in Morocco, Egypt, and Angola through the US State Department's Financial Service Volunteer Corps (FSVC).

Understand the Importance of Cash Flow to Bankers, How to calculate it and what its Uses are. As a banker, you need to interpret cash flow and calculate it accurately to pitch a stellar success. This session is designed to assist you as a banker in calculating cash flow from operations and help you to calculate Global Cash Flow Analysis for those entities that must rely on excess cash generated by their owners to service the business entity’s commercial debt.

The webinar will explain how the cash flow statement is derived from the balance sheet and the income statement, and then it will describe its three component cash flow activities—operating, financing, and investing. By the end of the session, you will see how cash flow is incorporated into the analysis and underwriting of a business borrower.

There is an old saying in credit analysis, “Borrowers pay back loans from cash flow, not profits.” But it is not just cash flow; it is cash flow from operations that is the most desirable source of repayment because it is generated by a borrower managing its working capital assets and earning a sustainable profit. This webinar will explain the difference between profits and cash flow as well as cash flow from operations vs. cash flow from financing and investing activities. After all, borrowing from another lender or liquidating fixed assets to pay you back ultimately hurts the long-term viability of the borrower. 

Areas Covered    

Upon completion of this webinar, the participant will have a good understanding of how cash flow is calculated and more importantly, how to interpret its meaning. Specific areas that will be covered include:

  • An explanation of how Cash Flow Analysis relies on the conversion of an Accrual Basis Financial Statement into a Statement of Cash Flow (or Cash Basis Statement) because loans are repaid with cash and not profits
  • Review of the Rules of Cash Flow in determining how much cash is generated from items on the balance sheet
  • Global Cash Flow Analysis Methodology utilizing financial statements, tax returns and credit reports of commercial borrowers and individuals
  • Comparison of operating cash flow to the more inaccurate traditional cash flow (profits plus depreciation) and EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) method of determining cash flow
  • A free cash flow method which can convert EBITDA into operating cash flow

Speaker will also be talking about:

1. Accounting method: Cash basis vs. Accrual basis: Understanding the differences in the two accounting methods and to analyze their advantages and disadvantages
2. Accrual method: Comprehension of Financial statements prepared on an Accrual Basis and recognizing all economic events regardless of the accumulation of cash at the point of sale or the payment of costs and expenses at the time the costs and expenses are incurred
3. Statement of Cash flows: Shows the cash inflows and cash outflows from operating activities, investing activities and financing

Course Level - Basic/Fundamental   

Who Should Attend   

  • Commercial Loan Officers
  • Credit approvers
  • Loan/credit review staffs
  • Business Development Representatives
  • Branch Managers
  • Business Credit Analysts
  • Risk Managers of Real Estate companies and FIs
  • Accountants and Auditors
  • $200.00


Recorded / Download Access