Determining an entity’s ability to generate cash flow is essential whenever repayment of a loan will extend beyond one year. Cash flow analysis measures an entity’s ability to generate sufficient cash to operate successfully and have excess cash to service annual debt payment requirements. Understanding how to calculate and interpret cash flow is essential for successful financial institutions.
Learn how to calculate cash flow using the Universal Cash Flow Analysis method (UCA), which determines the flow of cash into and out of a business entity. First, we’ll define cash flow and identify potential sources and uses of cash. Next we’ll illustrate how cash flow analysis is actually the process of converting an Accrual Basis financial statement into a Cash Basis financial statement. We’ll cover the Rules of Cash Flow when determining cash flow generation from changes in asset, liability and capital accounts on balance sheets over time. We’ll culminate by using a full UCA from beginning to end.
- Comparison of Traditional Cash Flow Method (Net Income + Depreciation + Interest divided by Annual Debt Service) to the UCA model
- Rules of Cash Flow
- Accrual Basis versus Cash Basis of preparing financial statements, and how cash flow analysis links the two
- How each amount on a Universal Cash Analysis is calculated and the meaning of each
- A Fast Cash Analysis method that can achieve the same results in less time than the UCA method
- Leave with a good understanding of how cash flow is calculated and more importantly, how to interpret its meaning.
Who Should Attend
Senior Loan Officers, Senior Credit Officers, Commercial Loan Officers, Branch Managers, Credit Analyst, Loan Review Personnel, and Consumer Loan Officers.