Financial Modeling for Credit Professionals
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.
Participants should have a good working knowledge of Excel and financial modeling prior to taking this course.
1 - 2 days, depending on the amount of material to be covered.
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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