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Commercial Credit Certificate-Course Description

 

The program consists of seven modules developed through 15 weeks of instruction and a one-week break. The underlying instructional structure of the courses is to prepare students to develop a loan package based on the analysis of the loan application of a business selected by each student in the third week of the program. The Commercial Credit Certificate’s curriculum has the following scope and sequence.

 

 

  • Identify the standard financial analysis process of commercial credit evaluations
  • Introduction to spreading financial information of small firms
  • Introduction to cases studies on credit requests of small firms

 

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  • Analysis of income statements for predicting future business performance and helping assess risk or uncertainty of cash flows
  • Use of retained earnings statements to identify other types of income and restrictions on earnings
  • Relevance of liquidity ratio to measure corporate short-term ability to pay maturing obligations
  • Analyze traditional financial statements using  ratios that assess liquidity, activity, profitability, and coverage
  • Trend analysis of entities and industries
  • Understanding the balance sheet as a source to assess liquidity, solvency, and financial flexibility
  • Developing the balance sheets, income statements and common size financial statements
  • Comparing the common size financial statements with the RMA data

 

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  • Performing comparative and trend analysis of financial metrics
  • Analyzing trends in key financial ratios
  • Analyzing trends in components of direct cash flow statements
  • Interpreting trends in cash based financial ratios
  • Performing financial analysis of multiple real life cases on commercial credit requests of small firms

 

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  • Differentiating between liquidity and solvency
  • Understanding the traditional measures of liquidity and their shortcomings
  • Performing collateral analysis
  • Interpreting working capital cycle to estimate the future financing requirements
  • Performing sensitivity analysis of the projected financial requirements

 

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  • Estimating risk premium based on credit risk and maturity of loan
  • Estimating the profitability of loan by comparing expected income against loan risk
  • Summarizing credit analysis to make an overall recommendation

 

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  • Analyzing market dynamics, cyclicality, and barriers to entrance in industry analysis
  • Analyzing the role of management, ownership and organization structure in credit analysis
  • Economic analysis: key economic factors
  • Developing an economic and industry outlook
  • Company analysis: management and ownership
  • Establishing the deterioration of a loan or company and defining a strategy to prevent or reduce losses

 

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  • Types of corporate entities and of organization document
  • Understanding the basic steps in a loan transaction
  • Identifying key loan documents
  • Analyzing the fundamental provisions of key loan documents
  • Analysis and negotiation of commitment letters and term sheets
  • Selecting loan documentation to fit the transaction
  • Analysis of key provisions in loan agreements
  • Drafting process for loan documentation

 

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  • Summarizing the strengths and weaknesses of a firm by combining the analysis of common size financial statements, financial ratios, cash flow statement, and working capital cycle
  • Identifying specific “mitigants,” or factors that could potentially diminish or alleviate the credit risk

 

 

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Last updated or reviewed on 1/27/15

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