Credit Analysis Course

Knowledge and skills required to analyze a borrower’s financial performance data to determine their creditworthiness

What is a Credit Analysis Course?

A credit analysis course equips credit professionals with the necessary skills that they need to perform their roles with efficiency. Specifically, the courses equip learners with the skills required to perform due diligence when evaluating the creditworthiness of a potential borrower or debt issuer.

Credit Analysis Course

Learners also gain exposure to analytics tools that they can use to evaluate the financial data of an entity to determine their financial health and their ability to generate enough cash flows to service the debt. A credit analysis course may cover broad categories of credit, including credit derivatives, credit portfolio risk management, credit modeling, credit analysis, early warning signs detection, as well as consumer credit.

Quick Summary

  • A credit analysis course equips students with the skills and knowledge required to analyze a borrower’s financial performance data to assess their creditworthiness.
  • Students also learn about analytical tools and techniques that can be used to assess the ability of a borrower to generate sufficient cash flows to meet debt obligations.
  • A credit analysis course covers broad topics ranging from credit modeling, consumer credit, credit derivatives, credit portfolio risk management, among other topics.

Credit Analysis Course Options

Students seeking a career in credit analysis can look at different course options. Usually, students can choose from an associate degree, degree, master’s, and even Ph.D. programs. They can also obtain industry certifications by attending credit analysis classes and sitting for a timed exam at the end of the course. Most industry certifications may require an associate degree, a few years’ experience, or a bachelor’s degree from the participants.

Students can choose to attend a credit analysis course either in traditional institutions or online schools. There are a variety of accredited online schools that provide credit analysis courses at a fraction of the cost charged by traditional institutions. The courses are offered by instructors associated with premier traditional institutions, accomplished credit professionals, or recognized industry leaders.

Unlike traditional institutions, online schools provide greater flexibility to students looking to attend classes at their preferred time without disrupting their regular routines. Students who complete the courses receive a certificate, which they can use to boost their resume.

Main Courses Taught in Credit Analysis

Credit analysis courses teach students how to analyze corporate borrowers to determine their creditworthiness, as well as how to prepare financial projections and make recommendations on the financing structures. Students also learn how to structure debt funding based on the assessed risks and projections.

The following are some of the credit analysis courses that students can expect to learn:

1. Principles of Lending

The principles of lending course introduces credit professionals to the fundamental principles of credit and banking in the United States. Students get to understand credit exposure, credit risk, and debt forms, as well as the reasons why entities borrow credit.

The course covers various topics, such as financial instruments, consumer lending, consumer loans, negotiable instruments, interest rates, and the functioning of the Federal Reserve System. The concepts covered will help credit analysts evaluate industry risks and market competition and understand how the identified risks are likely to affect the performance of the entity.

2. Ratio Analysis

The ratio analysis course introduces students to the common ratios that are used in corporate financial analysis and how the ratios can be used to evaluate the creditworthiness of a corporate entity. The course introduces students to the analysis and interpretation of various types of ratios, such as efficiency ratios, liquidity ratios, profitability ratios, leverage ratios, and valuation ratios.

In addition, the course teaches students how to use the financial ratios and metrics to assess the borrower’s liquidity and current working capital, as well as the working environment. Students learn how to analyze the leverage and capital structure of an entity to get an overview of its current risks, off-balance-sheet risks, and weaknesses in the company’s strategy.

3. Financial Risk Analysis

The financial risk analysis course introduces learners to the various financial risks that businesses face and how to manage such risks. Specifically, the course focuses on credit risk, liquidity risk, market risks, operational risks, and foreign exchange risks.

Learners are introduced to the tools and techniques that they can use to manage financial risks. The tools and techniques can include futures contracts, option contracts, value at risk (VAR), portfolio distribution analysis, portfolio beta, etc. Students also learn how risk management tools can be used to manage the risk or return profile of lenders.

4. Cash Flow Analysis

The cash flow analysis course introduces students to the basics of the statement of cash flows. The course looks at the cash flows from operations, cash flows after investment, and cash flows after financing. Students also learn the importance of achieving stable cash flows that are enough to meet the debt obligations of the entity, mainly principal and interest payments. The course also equips learners with knowledge about financial hedges and how they can be used to protect against financial risks.

5. Projections and Structuring

The projections and structuring course introduces students to the approaches of preparing financial projections for the balance sheet, income statement, and cash flow statement. Students learn how to assess the capital structure and financial requirements of an entity and make decisions on the credit exposure, as well as make recommendations to the lender on the best possible financing structure of the borrower. They also learn how to structure debt financing based on the borrowing entity’s objectives and risks, as well as their assessment of financial risks and projections of the borrower.

More Resources

CFI offers the Commercial Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful:

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