Financial Modeling for Credit Professionals

Description

This course focuses on the design and creation of an interactive financial model for a company with the purpose of analyzing credit capacity and impact of debt. Course concepts include model design, logic, construction, financial concepts and accounting treatment. Participants will build a model that includes a forecast of a company’s income statement, cash flow statement and balance sheet. Participants will recapitalize a company’s balance sheet and then forecast specific pieces of debt and equity so that the model can be used for credit purposes or as an LBO model.

Details
Prerequisites

Participants should have a good working knowledge of Excel and financial modeling prior to taking this course.

Time

1 - 2 days, depending on the amount of material to be covered.

Learning Topics

Design and Structure a Financial Model

  • Design a clear and logical financial model
  • Discuss the need for a model to serve as a marketing tool
  • Create clearly defined inputs and assumptions
  • Connect strings of data to create assumptions and footnotes

Build Powerful Scenarios and Financial Statements

  • Use switches to create effective scenarios and value drivers
  • Design and incorporate a company’s income statement, balance sheet and cash flow statement
  • Construct all necessary schedules

Model a Company’s Capital Structure

  • Build a Sources and Uses schedule in a model
  • Recapitalize a company’s balance sheet
  • Properly incorporate Senior Term Debt
  • Create a robust bank operating line (or revolving credit facility) with a cash sweep
  • Incorporate a variable interest rates based on pricing grids
  • Build a provision for non-cash Payment in Kind (“PIK”) interest on various pieces of debt
  • Create a well-designed shareholders’ equity schedule
  • Properly forecast the company’s balance sheet
  • Understand model circularity
  • Learn to create a “circular reference breaker” to rid a model of undesirable error messages when the model crashes
  • Understand and insert operating and credit ratios
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