Session I: RMA LENDING ACADEMY I | May 7-11, 2018
Monday-Thursday: 8:30 a.m. - 5 p.m, Friday: 8:30 a.m. - 12 p.m.
Master more advanced skills to help you make sound credit decisions.
Sponsored by Business Alliance Financial Services
COMMERCIAL LENDING SCHOOL REGISTRATION
If you would like to register more than one individual from your organization for our commercial lending school, please contact Jennifer Coppock at email@example.com for an invoice.
Accommodations: A block of rooms has been reserved for this event at the Hilton University of Houston. The special room rate will be available until April 23 or until the group block is sold-out, whichever comes first. | Book your room.
The RMA Lending Academy I teaches basic core skills for commercial lending and credit. You should use it as a springboard to RMA’s core credit risk curriculum. This introduction will help you better understand what your members need in order to run a strong business and what the credit union needs in order to make sound lending decisions.
The RMA Lending Academy I covers three fundamental topics – accounting, financial statement analysis (including tax returns), and cash flow analysis – for lending to small, closely held businesses.
WHO WILL BENEFIT?
The RMA Lending Academy I is designed for credit risk professionals who are new to the credit union (0-3 years), such as new hires, branch managers, those new to commercial lending, business development officers, and relationship officers who are required to read financial statements and tax returns.
BAFS member price: $2100
BAFS non-member price: $2600
- Describe the principles underlying accrual accounting.
- Execute accounting functions to understand a company’s financial position.
- Connect various industry and business characteristics with financial profiles.
- Determine a company’s financial needs from its industry life cycle.
- Apply client interview techniques to determine the viability of a loan request.
- Ask questions about the trends in key financial statement accounts to highlight key risk points.
- Perform financial statement ratio calculations and analyze trends.
- Construct a cash flow statement and analyze the results to determine the sustainability and predictability of cash flow to repay debt.
- Connect a company’s qualitative profile to financial statement trends.
- Create loan structures that match borrowing needs to repayment sources.
- Evaluate financial performance through tax return analysis.
MODULE 1 – EVALUATING INDUSTRY, MARKETS AND MANAGEMENT
This module provides participants with an overview of the major principles of accounting necessary to analyze a company’s financial statements. After completing this module, participants will:
- Describe the difference between cash and accrual accounting.
- Explain the principles underlying accrual accounting including:
- Historical cost
- Consistency and conservatism
- Revenue recognition
- Expense recognition
- Matching principle
- List the major parties involved in establishing Generally Accepted Accounting Principles (GAAP).
- Complete journal entries.
- Post transactions to a general ledger.
- Develop an income statement and post-closing trial balance sheet
- Evaluate the quality and accuracy of financial statements.
MODULE 2 – INDUSTRY CHARACTERISTICS & LIFE CYCLES
This module will link the qualitative and quantitative concepts of business and industry risk analysis. After completing this module, participants will:
- dentify the financial characteristics of various industry sectors.
- Compare variations in asset distribution, asset turnover, leverage, liability structure, and profitability for industry sectors.
- Identify industry life cycles and their effects on the financial profile of a company and its financing requirements.
MODULE 3 – INTERVIEWING TECHNIQUES
Participants will use the concepts learned in Module 2: Industry Characteristics/Life Cycles to practice active listening skills in conducting a client interview. A focus on evaluating business, industry, and management risk is highlighted. After completing this module, participants will:
- Identify and apply techniques for conducting a client interview.
- Evaluate the merits of a loan request based on the interview process.
MODULE 4 – BALANCE SHEET AND INCOME STATEMENT ANALYSIS
Participants will review the balance sheet and income statement and complete an analysis of each. The focus of the analysis is to review a company’s financial position in the context of a loan request.. After completing this module, participants will:
- Define, classify, and interpret balance sheet accounts, including assets and liabilities and net worth.
- Evaluate each asset’s liquidity and its availability for loan repayment.
- Identify the terms and conditions of liabilities.
- Analyze trends in the liquidity and leverage of a company.
- Determine if revenues are real and sustainable.
- Evaluate expenses to determine if they are adequate, fully accounted for, controlled, and comparable.
- Calculate and analyze profit margins, coverage ratios, and financial productivity.
MODULE 5 – CASH FLOW ANALYSIS
Participants will review the various methods of cash flow to understand the viability of debt repayment. After completing this module, participants will:
- Identify the purpose of cash flow analysis.
- Compare various cash flow formats.
- Outline the difference between accrual and cash flow basis income statements.
- Analyze a cash flow statement.
- Identify cash flow forecasting variables.
- Identify and analyze the impact of management decision- making on cash flow.
MODULE 6 – LOAN STRUCTURING
Participants will receive an overview of loan structuring concepts to ensure repayment from cash flow as a primary source and assets as a secondary source. After completing this module, participants will:
- Classify borrowing causes as short or long-term.
- Structure loan repayment terms to match borrowing causes.
- Evaluate the risks associated with various borrowing causes and repayment sources.
- Determine the primary and secondary sources of repayment.
- Link analysis of financial statement trends to business, management, and industry risk.
MODULE 7 – PERSONAL FINANCIAL STATEMENTS AND TAX RETURNS
Participants will get an overview of financial statement analysis in the context of various tax returns. The analytical focus is to isolate cash flow to repay debt from various tax forms. Upon completion of this module, participants will be able to:
- Highlight the difference between various legal structures and business entities.
- Evaluate business tax returns for items relevant to cash flow.
- Analyze a personal financial statement.
- Estimate personal cash flow using a personal financial statement and tax return.