Learning Objectives
By the end of this module, you will be able to:
Understand the Role of Financial Forecasting in Commercial Lending
Learn how financial forecasting helps credit analysts assess future cash flow, identify risks, and make informed credit recommendations.
Understand the importance of adjusting client’s projections to create realistic base cases scenarios.
Evaluate and Validate Forecast Assumptions
Compare forecast figures to historical performance to check for consistency and credibility.
Spot common red flags such as overly optimistic revenue, understated costs, or lack of market context.
Build and Test Base Case and Downside Scenarios
Create base and downside forecasts to assess the client’s ability to manage through varying conditions.
Use key financial metrics like DSCR and ICR to evaluate debt servicing capacity.
Apply Sensitivity and Scenario Analysis
Test the impact of changes in sales, input costs, or interest rates on cash flow and meeting of covenants.
Identify early warning signs and performance triggers.
Structure Loans using Forecast Insights
Align loan terms, loan principal repayments, and covenants to the client’s projected performance.
Support tailored credit solutions that balance opportunity with risk management.
