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Advanced Cash Flow

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Business Issue - Commercial lenders are often challenged by complex borrowing situations that require in-depth analysis of cash flow. Many remain unclear about the specific analytical insights gained from applying more rigorous cash flow techniques.

Omega Performance’s Solution - Advanced Cash Flow is a workshop-based course that provides participants with intensive, case-based application of cash flow analysis to a wide-ranging set of business scenarios. It enhances commercial lenders’ skills and knowledge so they are better able to:

  • Connect quantitative cash flow analysis with qualitative, non-financial factors such as strategic business issues
  • Interpret the quantitative results from various levels within the UCA cash flow format
  • Compare the results of cash flow analysis using various formats: UCA, GAAP cash flow, and EBITDA
  • Analyze debt service coverage using different approaches—EBITDA vs. Net Cash from Operations (NCFO)
  • Identify clues to detect misleading information
  • Assess the impact on cash flow of accounting practices

What Is Included

Advanced Cash Flow concentrates on evaluating the adequacy of a borrower's cash flow.  The analytical process begins with data furnished by some of the more commonly used cash-flow reporting formats, testing those data for sustainability and finance-ability.  It then examines "How much debt-service coverage is enough?" in light of the borrower’s industry, fixed asset requirements, growth rate, profitability, length of the operating cycle, and other factors.  This analysis is applied to three different cases of varying size and complexity.

Principles of Cash Flow and 3-Layer Approach

Quantitative Analysis of Cash Flow

  • EBITDA
  • Free cash flow  
  • GAAP cash flow
  • Traditional/quick cash flow
  • UCA cash flow

Financial Drivers of Cash Flow

  • Change in sales
  • Change in margins 
  • Change in turnovers
  • Capital expenditures

Macro Factors Behind Cash Flow

  • Economy and industry
  • Management decisions and strategy 

Changes in EBITDA and EBITDA Coverage

  • EBITDA vs. NCFO
  • Cash flow from profits vs. Changes in balance sheet accounts
  • Debt service coverage using EBITDA vs. NCFO

Sustainability of Cash Flow to Fund Sales Growth

  • Asset quality
  • Financial capital expenditures related to sales growth
  • Cash vs. non-cash items
  • Recurring vs. non-recurring items

Delivery Options

Advanced Cash Flow is a one-day workshop conducted by Omega Performance consultants.