Financial Projections for Determining Long-Term Cash Flow Repayment Ability
Date: Apr 14, 2022, ThuStart Time: 10:00 AM PDT
Duration: 1.5 HrsBook Mark:
Topic ID: WEB01468
Why You Should Attend:
One of the most basic analytical and underwriting tools a banker must have is the ability to determine whether a borrower can repay its loans based on the financial information available.
Financial organizations extend credit to borrowers when the borrowers show the ability to repay the loans extended. Ideally, a request for a five-year loan should be supported by a 5-year cash flow projection.
Learn key assumptions in a projection and how to assess validity, the value of a downside-most likely projection to stress test the assumptions.
The session will explain the importance of revenues in projecting financial statements and cash flow. Then the session will show participants how to project the income statement, balance sheet and cash flow to calculate the loan amount needed to support projection and evaluate the ability of the borrower to repay the loan. Evaluation of underlying assumptions include the feasibility of revenue growth rate, profitability, productivity, efficiency, earning retention, and leverage. Besides calculating the loan amount needed to support the financial projection, analysis of the asset collateral base available to support repayment will be examined.
Areas Covered During the Session:
- How revenue projection determines income statement and income statement determines balance sheet
- Critical role of working capital assets, capital expenditures and retained earnings in supporting projection
- How to generate cash flow projection with balance sheet and income statement
- How to estimate loan needed to realize financial projections
- How to underwrite loan needed to fit lending organization’s policies
- How to support loan with appropriate collateral and guarantees
Who Will Benefit:
- Credit Analysts
- Credit Managers
- Credit Risk Managers
- Risk Managers
- Enterprise Risk Managers
- Chief Credit Officers
- Senior Lenders
- Senior Lending Officer
- Bank Director
- Chief Executive Officer
- Board Chairman
Dev Strischek, A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek is principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev also served as a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC). PCC’s purpose is to evaluate and recommend to FASB revisions to current and proposed generally accepted accounting principles (GAAP) that are more appropriate for privately held firms. He also served as the PCC’s representative to FASB’s Credit Losses Transition Resource Group supporting the new current expected credit loss (CECL) standard. Dev is the 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, Mr. Strischek was chief credit officer for Barnett Bank’s Palm Beach market. Besides stints at other banks in Florida, Kansas City, and Ohio, his 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. Mr. Strischek serves as an instructor in RMA’s Florida Commercial Lending School, the American Bankers Association's (ABA) Advanced Commercial Lending School and ABA’s Stonier Graduate School of Banking, and the Southwest Graduate School of Banking. 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. Recent conference presentations have ranged from the new GAAP accounting principles for revenue recognition, lease capitalization, and current expected credit losses (CECL) to commercial real estate concentration management, from character in lending to leveraged lending, from credit risk management techniques and tools to why EBITDA doesn’t spell cash flow. Mr. Strischek has written over 200 articles 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 RMA 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 and policy issues with banks in Morocco, Egypt, and Angola through the US State Department’s Financial Service Volunteer Corps (FSVC).
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