Wednesday, March 3, 2021
12:00 – 1:00 pm (Eastern Time)
11:00 – 12:00 pm (Central Time)
10:00 – 11:00 am (Mountain Time)
9:00 – 10:00 am (Pacific Time)
Bankers are in an excellent position to use their knowledge about lending to serve as effective financial advisors to their borrowers. Lenders have long known that expanding inventories to attract more customers and easing credit terms to entice their customers to buy the inventory can tie up cash flow as inventory turns more slowly and receivables take longer to collect.
Showing a borrower how a faster cash conversion cycle—cash to inventory to receivables back to cash—improves the borrower’s cash flow means the lender can also improve the odds of loan repayment. The other beneficial result is that working capital management also boosts shareholder value.
This banking webinar will show bankers how to advise borrowers on the benefits of effective working capital management to operating cash flow and to shareholder value.
Description of Session:
First, the key elements of stronger working capital management are disclosed and demonstrated:
- Cash conversion cycle measured by cash turnover (days cash outstanding, inventory turnover (days inventory outstanding), receivables turnover (days receivable outstanding) and accounts payable turnover (days payables outstanding)
- Industry statistics to compare borrower with its peets
- Alternatives for improving each of these measures
- Monitoring borrower’s relative performance in accelerating cash conversion cycle
Second, the methodology for calculating shareholder value is explained:
- Discounted cash flow projection employing these factors
- revenue projections
- tax rate
- after-tax profit margin
- working capital investment
- capital asset investment
- weighted average cost of capital
- Determining relative impact of each of these factors on shareholder value
Finally, better working capital management of the cash conversion cycle is shown to be the most expedient way to increase shareholder value.
Areas Covered during Session:
- Working capital management and the cash conversion cycle
- Discounted cash flow to project shareholder value
- Credit Analysts
- Credit Managers
- Loan review officers
- Work-out officers
- Commercial Lenders
- Credit Risk Managers
- Chief Credit Officers
- Senior Lenders
- Senior Lending Officer
- Bank Director
- Chief Executive Officer
- Board Chairman
A frequent speaker, instructor, advisor and writer on credit risk and commercial banking topics and issues, Martin J. "Dev" Strischek is principal of Devon Risk Advisory Group based near Atlanta, Georgia. Dev advises, trains, and develops for financial organizations risk management solutions and recommendations on a range of issues and topics, e.g., credit risk management, credit culture, credit policy, credit and lending training, etc. Dev is the former SVP and senior credit policy officer at SunTrust Bank, Atlanta. He was responsible for developing, implementing, and administering credit policies for SunTrust’s wholesale lines of business--commercial, commercial real estate, corporate investment banking, capital markets, business banking and private wealth management. Prior to SunTrust, Mr. Strischek was chief credit officer for Barnett Bank’s Palm Beach market. Dev is also a member of the Financial Accounting Standards Board’s (FASB’s) Private Company Council (PCC).
1.0 CPE Credits & 1.2 AAP Credits