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Fitch Learning

Corporate Credit Analysis — Blended

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This programme offers a blended approach to learning by combining online and classroom learning. The overall objective is to enhance analytic skills. Participants will use a structured and systematic approach to evaluate the credit standing of a company and assess the relative attractiveness of the risk-return profile of the investing/lending proposition.

The pre-course online learning introduces or refreshes core elements of financial analysis. The three day highly interactive course uses case studies and exercises to illustrate key learning points, allowing participants to apply the concepts to a real-life scenario. Participants are encouraged to be focused and concise in developing and articulating credit judgement.

Key Learning Outcomes

  • Apply a structured approach to assess the creditworthiness of a corporate borrower
  • Evaluate the performance of a company based on qualitative and quantitative frameworks and tools
  • Identify the key factors that drive a company’s future performance and evaluate the likely impact on its credit standing
  • Use a cash flow approach to ascertain a company’s ability to service/refinance its debt as it comes due
  • Use appropriate market indicators, where available, to understand refinancing risk and the market view on a credit


Pre-course preparation – online

The content covered in the online pre-course modules have been designed to refresh knowledge around financial analysis. This will allow the class room session to focus on the application of financial analysis in the overall corporate credit analysis. The e-learning modules have interactive elements, where practical examples related to actual company reports are used to calculate ratios and used to analysis financial performance and leverage. It is expected that these modules will take the participant eight hours to complete.

Financial Statements and Accounting

  • The annual report
  • The primary financial statements – overview
  • The primary financial statements – detailed
  • Accruals accounting principles
  • Statement of financial position (balance sheet) – Assets
  • Statement of financial position (balance sheet) – Liabilities and Equity
  • Statement of comprehensive income (income statement)
  • Linking the balance sheet and income statement; equity
  • Balancing the books- double entry bookkeeping
  • Depreciation, amortization, accruals prepayments
  • Application: Create a set of accounts by reporting step-by-step actions
    • Statement of cash flow
  • Group accounting
  • Cash flow statement
  • Application: Derive a simple cash flow statement

Financial Analysis

Performance and Cash Flow

  • Trend Analysis
  • Revenues
  • Performance – intro common size
  • Performance ratios
  • Segmental information and strategic report
  • Operating and non-core items
  • Cost behavior and break-even
  • Interest, Taxes and Net Profit
  • Return on Equity
  • Application though out: Calculate and use key ratios

Non-current Assets

  • Accounting treatment of assets
  • Accounting treatment of Goodwill and intangible assets
  • Accounting treatment of Capitalized expenses
  • Analyzing non-current assets
  • Analyzing intangible assets
  • Analysis Property, Plant and Equipment
  • Overall fixed asset management and cash flow analysis
  • Application though out: Calculate key ratios

Working Capital

  • Cash conversion cycle
  • Working capital – days outstanding
  • Net Working capital
  • Application though out: Calculate and use key ratios
  • Working capital changes in cash flow
  • Risks in related to working capital
  • Overall working capital asset efficiency assessment
  • Application though out: Calculate and use key ratios


  • Overview of liabilities
  • Provisions
  • Equity- Capital and reserves
  • Funding structure – assessment
  • Off balance sheet obligations- overview
  • Leasing
  • Other off-balance sheet obligations
  • Debt service
  • Interest and fixed charge coverage
  • Debt service coverage
  • Years to repayment
  • Liquidity
  • Application though out: Calculate and use key ratios

Application Case Study


The classroom session is focused on application of credit analysis techniques in a structured way. Case studies and exercises are drawn from a range of industries and regions and where possible include investment grade and sub-investment grade companies operating in mature and/or developing financial markets.

Day One

Macro Considerations

Macro risks in the operating environment, financial markets, and industrial sector a borrower operates in:

  • Location: Country risk and markets where a borrower raises funds
  • Sector: Competitive intensity of the sector(s) a borrower operates in: structure, key players, basis of competition, risk of new entrants, substitution and relative bargaining power of buyers and suppliers
  • Long term growth potential and volatility of demand
  • Application: Illustration case study provided as pre-course material
  • Application: Identify asset configurations, funding structures and earnings of companies in different sectors

Management and Ownership

The role and strategy of the management team as well the influence and control of shareholders are assessed:

  • Management’s business and financial strategy and performance goals
  • Corporate governance and reporting structure
  • Group Structure and shareholders
  • Quality of financial reporting
  • Application: Illustration case study provided as pre-course material

Business Profile

Understanding a company’s business strategy in the context of sector, country of operation and shareholder requirements:

  • Diversity of services/products, geographical end markets, customer and suppliers
  • Competitive Position: product dominance and a company’s relative market position. Comparative size and possible operating efficiencies
  • Sector specific factors
  • Application: Illustration case study provided as pre-course material

Financial Profile – Cash Flow and Profitability

Assessment of the quality and stability of earnings and cash flows from operations needed to finance operations and capital investments (“Business Risk”).

Earnings and Cash Flow

  • Internal and/or external factors impacting revenues and core profitability
  • Performance versus the market and per division/geography
  • Application: case study with exposure to FX and commodity prices
  • Impact on performance by non-operating items
  • Looking beyond EBITDA at sustainability of funds flow from core operation (e.g. funds from operations – before changes in working capital)
  • Application: Illustration case study using additional financial ratio and sector peer information

Day Two

Financial Profile – Cash Flow and Profitability (cont.)

Asset Investment and Efficiency

  • Working capital management, cash conversion cycle and supplier finance
  • Application: comparison of cash conversion of companies operating in the same sector
  • Cash flow impact of the company’s working capital management stability of cash flow from operations
  • Expansion or replacement asset investment in on-balance sheet fixed and intangible assets
  • Industry specific utilisation measures and off-balance sheet ‘assets’
  • Example(s)
  • Application: Illustration case study using additional financial ratio and sector peer information

Financial Profile - Funding Structure and Financial Flexibility

Evaluation of the appropriateness of a company’s funding structure and ability to service its financial obligations. (“Financial Risk”):

Capital Structure and funding instruments used

  • Financial discipline and dependency on external financing
  • Funding instruments used, tenor, currency of the debt and any off-balance sheet financial obligations
  • Financial leverage and comparison with the business risk from operations
  • Application: Illustration case study using additional financial ratio and sector peer information

Day Three

Financial Profile - Funding Structure and Financial Flexibility (cont.)

Financial Profile – Financial Flexibility

  • Debt Service Capability: Affordability of the level of debt: Meeting interest and debt repayments obligations (debt service) from internally generated cash over the past years and based on future cash flow available for debt service
  • Application: assessment the capital structure and debt service capability for several companies operating in a similar sector
  • Debt capacity assessment: present value of future cash available for debt service
  • Foreign Exchange Exposure, hedging strategies and potential impact on cash flow and debt servicing capability
  • Refinancing risk and liquidity: ability to meet short-term financial obligations as they fall due from current operations
  • Application: Illustration case study using additional financial ratio and sector peer information

Final Group Case Study

The aim of the final group case study is to allow participants to apply the framework and tools of credit analysis to a company and make a concise and conclusive presentation to the group on the final day of the course:

  • Companies used for the group case studies vary per location of the course and will be provided for reading in the evening of the penultimate day.
  • Preparation and presentation of a complete credit analysis in small groups of 2 to 5 participants takes place on the last day

Who should attend

Anyone with an interest in building or further enhancing their corporate analysis skills: Financial professionals in a credit risk, asset investment or relationship management role, as well as those engaged in the assessment of counterparty risk from an underwriting viewpoint or trade debtor exposure. Regulators or those in a supervisory role with an interest in understanding the underlying credit assessment needed in the organizations or departments they assess. Participants are expected to be familiar with financial statements.


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