This program covers how to calculate and analyze the basic set of financial statement (or tax return) ratios for operating businesses.  Preliminary steps (covered in related programs) include understanding the types of financial statements and level of accountant involvement, distinguishing between cash and accrual accounting methods, and the unique format and features of business tax returns.  We now turn to the four primary sets of ratios: (1) liquidity, (2) leverage, (3) profitability, (4) efficiency, and (5) debt coverage.  Using a comprehensive case, calculations are demonstrated, as wells as major issues, strengths and limitations of the various ratios.  Participants will work from a ratios reference guide that is intended to be a resource for future statement spreading.

Topics to be covered include:

• Basic guidelines for classifying and spreading the data
• Identify the key components of a balance sheet
• Calculate liquidity and leverage ratios for an example business and interpret the results
• Identify situations with positive or negative working capital
• Describe common-sizing of the balance sheet
• Identify the key components of an income statement
• Calculate profitability and traditional cash flow measures for an example business and interpret the results
• Calculate efficiency and debt coverage ratios for an example business and interpret the results
• Explain the use of industry and comparative data within financial analysis

Target Audience:  Credit analysts, portfolio managers, assistant relationship managers, community bankers, small business lenders, commercial lenders, consumer lenders, branch managers that lend to business owners, private bankers, special assets officers, loan review specialists and others involved in business and commercial lending