Advanced Financial Statement Analysis - Liquidity, Activity, Leverage, Operating Performance, Cash Flow, Z-Score and Case Studies

This 90-minute advanced financial statement analysis webinar is built for commercial lenders and credit administrators. It reviews the four financial statements, the income statement, statement of retained earnings, balance sheet and statement of cash flows, and then applies a five-step analysis model: liquidity, activity, leverage, operating performance and cash flow.

Along the way you'll cover revenue and expense recognition, FIFO, LIFO and average inventory costing, repairs versus improvements, depreciation methods, amortization and depletion, receivables and payables assessment, intangible assets, leases and the equity section.

The session also explains levels of financial statements, from company-prepared to audited, audit opinion types, the Z-score bankruptcy predictor and sustainable growth models, with case studies to show correct interpretation.

• Determine a company's true cash position using adjusted liquidity measures
• Interpret turnover ratios and calculate the cash conversion cycle
• Calculate leverage and adjust it for subordinated debt
• Gauge true profitability and compare accrual and cash basis results
• Calculate and apply EBITDA, fixed-charge coverage, free cash flow and UCA cash flow
• Use the Z-score and sustainable growth models
• Apply the five-part model to case studies

The four financial statements

• Income statement, statement of retained earnings, balance sheet and statement of cash flows
• Revenue and expense recognition
• FIFO, LIFO and average inventory costing
• Operating expenses (repairs) versus improvements
• Depreciation: straight-line, units-of-production and double-declining balance; amortization and depletion
• Accounts receivable, allowance for doubtful accounts, intangible assets and accounts payable
• Capital and operating leases
• The equity section: partners' capital, common and preferred stock, treasury stock, stock splits and retained earnings
• Levels of statements: company-prepared, compiled, reviewed and audited
• Audit opinions: unqualified, qualified, adverse and disclaimer

Five-part analysis model

• Liquidity: finding the true cash position by adjusting working capital, current ratio and quick ratio
• Activity: receivable, payable and inventory turnover and the cash conversion cycle
• Leverage: debt versus equity and adjusting for a subordination agreement
• Operating performance: true profitability and accrual versus cash basis income statements
• Cash flow: EBITDA, fixed-charge coverage, free cash flow, cash basis cash flow and UCA cash flow

Related topics

• The Z-score bankruptcy predictor and sustainable growth models
• Case studies applying the five-part model

Reading financial statements correctly is central to sound credit decisions, and surface ratios can hide a company's true cash position and profitability. This session shows a structured approach to getting the real picture.

It suits commercial lenders, credit analysts, relationship managers, controllers, compliance and risk officers, business owners and executives.

• Commercial lenders
• Credit analysts
• Relationship managers
• Business owners
• Compliance managers and officers
• Risk managers and officers
• Controllers
• Presidents/vice presidents
• Managers/supervisors
• Sales representatives
• Marketing personnel
• Retail businesses owners
• Maintenance and security employees
• Stock room personnel
• Business vendors

David L. Osburn is the founder of Osburn & Associates, LLC, a business training and contract CFO firm that provides webinars, webinars, and keynote speeches for CPAs, bankers, attorneys, credit managers, and business owners on topics such as banking/finance/credit, negotiation skills, marketing, and management issues.

Mr. Osburn’s contract CFO clients include medical practitioners, financial institutions, law firms, CPA firms, architects, real estate developers, and contractors. His extensive professional background of over 30 years includes 16 years as a business trainer/contract CFO and 16 years as a bank commercial lender including the position of vice president/senior banking officer. His banking credentials include loan underwriting, loan work-out, management, and business development.

He has been an adjunct college professor (MBA and undergraduate courses) for over 30 years, teaching at Regis University and the College of Southern Nevada. He holds an MBA from Utah State University, a BS in Finance from Brigham Young University, and is a graduate of the ABA National Commercial Lending School at the University of Oklahoma. Additionally, Mr. Osburn holds the professional designation of Certified Credit & Risk Analyst (CCRA) as granted by the National Association of Credit Management (NACM).