Credit Skills

Question 1

Model for Financial Analysis

Answer 1

C - CAPITAL STRUCTURE
O - OPERATING PERFORMANCE
L - LIQUIDITY
D - DEBT SERVICE

Question 2

Analysis of the numbers

Answer 2

S - Sustainable
O - One off
D - Discretionary
A - Analysis

Question 3

COVENANTS OF LENDING - CAMPARI

Answer 3

C - Character
A - Amount
M - Margin
P - Purpose
A - Ability
R - Repayment
I - Insurace

Question 4

External factors impacting business
LEPEST

Answer 4

L - Legal
E - Economic
P - Political
E - Environmental
S - Social
T - Technology

Question 5

Assessment of Management - EBITDA

Answer 5

E - Experiance
B - Breadth
I - Integrity
T - Track Record
D - Depth
A - Advisors

Question 6

Attractive Lending Opportunity x 10

Answer 6

Financials:

• Meets TMCs
• Good purpose i.e growth, capex
• Evidence of Sevicability
• Strong security
• Profitable for Bank

Business:

• Low risk sector
• Experianced management
• Solid business reputation
• Experience of adapting to mitigants
• Diverse income stream / customer base

Question 7

Key Considerations for Credit

Answer 7

Industry Market Risks
- TMCs
- Sector Appetite
- Disruptor & Competitor
- Customer & supplier base

Reputational risk
Comfortable with Ownership
Deal structure (secured /unsecured)
Capital structure (skin in the game)
Financial risks to business
Easy to exit?