Global Financial Markets Institute»Credit Risk Analysis – Wholesale Credit for Small to Medium Enterprises (SMEs)

Credit Risk Analysis – Wholesale Credit for Small to Medium Enterprises (SMEs)

This two-day course will teach participants the basics of financial analysis for SMEs. SMEs offer special challenges for bankers and regulators as the typical SME is unrated and has much less information available to analyze. An introductory session will discuss the implications of the credit cycle and defaults associated with the cycle. Participants will evaluate the various aspects of fundamental credit analysis and incorporate quantitative and qualitative factors in developing a sound credit rationale.

Emphasis will be placed on the importance of the 5 Cs of credit to assess credit quality (character, capital, capacity, collateral and cycle) as well as the importance of internal risk rating systems in determining Expected Loss. Participants will review the various sources of data available and compare and contrast the data against other industry competitors. Practical real-world examples will be given on how to spot credit problems in order to determine credit deterioration and how to take appropriate action. External and market oriented early warning signs will also be discussed. The course will be a combination of lecture, group and individual exercises and group discussion. Participants will explore cases studies throughout the course to apply what they have learned and demonstrate their corporate analysis skills.

Course Objectives

By the end of the course the participant will be able to:

  • Analyze industry and financial trends
  • Compare financial statements of different companies across different time periods
  • Appreciate the qualitative and quantitative approached to analyzing financial statements
  • Explain the 5 Cs of credit
  • Explain the importance of Expected Loss
  • Analyze internal risk rating systems
  • Discuss the merits and pitfalls of ratio analysis
  • Discuss the various information sources available
  • Explain early warning signs of credit deterioration

Suggested Prerequisites:

  • Financial Statement Analysis or equivalent knowledge

Program Level: Intermediate

Advance Preparation: None

Computers and Financial Calculators: Calculators

Recommended CPE Credits: 14

Duration:2 days