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FINANCIAL MARKET COURSES

Credit Analysis – Balance Sheet Analysis

This course introduces the concept of credit analysis and sets out the details of a structured approach that will help credit analysts and other interest parties to extract meaningful information from the key sources of financial data and information – the balance sheet, the income statement, and the statement of cash flows.

  • OBJECTIVES

    On completion of this course, you will be able to:

    List the main types of assets and liabilities that appear on a balance sheet Calculate the key measures and ratios that can be derived from balance sheet values

    Recognize the typical adjustments made when accounts are consolidated or merged for groups or acquisitions, and the differences between contingent liabilities and off-balance sheet items

  • COURSE OUTLINE

    Topic 1: Balance Sheet Structure

    Balance Sheet Structure

    Current Assets

    o Valuation of Current Assets

    Noncurrent Assets

    o Valuation of Noncurrent Assets

    Current Liabilities

    Noncurrent Liabilities

    o Valuation of Liabilities

    Stockholders’ Equity

    Topic 2: Balance Sheet Analysis

    Tools of Balance Sheet Analysis

    Key Balance Sheet Terms & Calculations

    o Total Assets

    o Net Assets

    o Capital Employed

    o Working Capital

    Balance Sheet Percentage Analysis

    o Industry Comparisons

    o Peer Comparisons

    Capital Structure & Leverage

    o Debt/Equity Ratio Calculations

    o Factors Affecting the Debt/Equity Decision

    o Taking on Debt: Benefits & Drawbacks

    Liquidity

    o Working Capital

    o Current Ratio

    o Quick Ratio

    o Drawbacks of Liquidity Ratios

    Topic 3: Other Balance Sheet Considerations

    Consolidated Accounts

    o Example

    Mergers & Acquisitions

    o Price Differences

    o Noncontrolling Interests

    Contingent Liabilities

    Off-Balance Sheet Items

    o Operating Leases

    o Nonrecourse Structures

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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