Advanced financial analysis
QUALITY OF THE FINANCIAL STATEMENTS: WARNING SIGNS AND ADJUSTMENT TECHNIQUES
Amid the financing restrictions within the last four-five years, private companies played a significant “commercial banking” role for their customers, by accepting extended collection terms. Traditional banking credit shifted more and more to commercial one (supplier’s credit). Caused by this structural changes within the economy, the contagious and negative shocks propagation is much faster nowadays. Furthermore, the initiation of insolvency proceedings by an increasing number of large companies might endure the trend and inflate systemic risk.
Amid this challenging context, one must master and employ advanced financial techniques to signal risk sources, increase skepticism on earnings quality by using proper technical measures, deepen the understanding of operating cash flow and liquidity measures and least but not last have an throughout understanding of financial statements manipulation techniques, signal, measures and necessary adjustments. The aim of this course is to transfer this knowledge in a fast and practical way, through real case studies that will be presented and analyzed.
Financial analysts working for corporations, personnel within the credit risk management departments, SME’s, creditors like banks and other financial institutions and financial consultants who would like to get more insight in advanced financial analysis techniques. This course is also intended for economists/financial analysts working in a different field but would like to get a quick practical insight in corporate finance.
At the end of the lecture, the participants will be able:
- to know and interpret the main financial ratios;
- to calculate and interpret a company’s net cash position;
- to have an overview over expense / income recognition and impact on financial ratios;
- to understand the relation between level of accruals and the persistence of earnings;
- to calculate and interpret measures of earnings quality and relative comparison with peer companies;
- to integrate the financial statement analysis techniques and determination of credit limit.
The content of the course and lecturer’s presentation is designed to provide direct credit risk measures with the purpose to master practical methodologies employed in financial analysis and ease further usage in the day-to-day business.
- Fast review of financial statement positions (focus on balance sheet and P&L)
- Main financial indicators and interpretation. Insist on the company’s sustainable growth rate and PRAT model (expand ROE into 5 variables and question the quality for return sources)
- Sources of sustainable growth rate and capital structure
- Net cash position and long term liquidity buffer
- Capitalizing versus expensing costs – impact on financial statements and ratios, measures of manipulation
- Asset impairment and depreciation – methods, impact on financial ratios, warning signs and interpretation
- Cash basis – accrual basis accounting: implications on accounting discretion
- Income and expense recognition: Deferred / accrued – expenses / revenue
- Earnings quality measures , warning signs and interpretation
- Financial statement manipulation: practices and how to detect them
- Warning signs for revenue / expense recognition that affect quality of financial reporting
- Adjusting financial statements for: Operating V.S. Finance leases / Inflation / Questionable capitalized cost
- Integration of financial statement analysis techniques: soft & hard indicators, how to build credit limit recommendation, credit risk modelsto estimate probability of default
Iancu Guda, CFA, EMBA – General Director, Coface Credit Management Services SRL
As General Director of Coface Credit Management Services, Iancu Guda is responsible for developing lines of services. Iancu has over 10 years of experience in credit risk management, having held different positions in areas such as securitization of receivables, evaluation of loan portfolios, product development, etc. Starting 2013, he is an associated lecturer at the Romanian Banking Institute, where he teaches Advanced Financial Analysis, as well as Corporate Finance within the CEFA program (Certified European Financial Analyst), and he is a certified trainer. After graduating from the Academy of Economic Studies, majoring in Insurance, Banks and Stock Exchange, Iancu finalized the DOFIN program – European Excellence Center in 2010, and all three levels of certification for CFA in 2016. He also graduated from the Excecutive MBA Program, Sheffield University, in 2016. Starting March 2012, Iancu is an active member of AAFBR (the Association of Financial and Banking Analysts in Romania); he has been the Vicepresident of AAFBR from 2014 to 2016, and, subsequently, he has become the President of the Board of AAFBR for the 2016-2018 term.
RBI will hold the course on its premises, providing specialised lecturers, course materials and catering services during the training day.
At the end of the course, participants will be given a certificate, issued by RBI (under the aegis of the founding members: NBR and RBA), with 14 CPD credits.
For the course fee and other details please contact us by phone or e-mail.
Telephone: 021 327 48 93