The CPA’s Role in Negotiating Loan Covenants (Currently Unavailable)
Author: David Osburn
| CPE Credit: |
2 hours for CPAs |
Join David Osburn as he walks through an overview of loan covenants including what is a “covenant” and why banks and other institutions utilize covenants.
The session will then review “common types” of loan covenants including the Current Ratio (liquidity), Debt to Equity Ratio (leverage), and EBITDA (cash flow) calculations. We will also discuss additional financial covenants including Fixed-Charge Coverage, Net Worth (including tangible net worth), and the Borrowing Base Certificate (BBC).
David will also cover drafting or creating financial covenants and negotiating, setting, and monitoring the covenants. Then the session will then explore the breaching of financial covenants and the financial institution’s recourse when a covenant has been exceeded. Case studies will be used to illustrate the course concepts.
Publication Date: January 2020
Designed For
CPAs, CFO/controllers, financial managers, auditors, financial analysts and practitioners who provide accounting, tax or consulting services to businesses.
Topics Covered
- Overview of loan covenants
- "Common types" of loan covenants
- Personal Cash Flow (Business Owner/Guarantor)
- Global Cash Flow
- Calculating Financial/ Loan Covenants
- Calculating Loan Covenants
- Additional Loan Covenants
- Creating, Negotiating, Setting, and Monitoring Loan Covenants
- The Lender's Recourse When a Loan Covenant Has Been Broken
- Looking Beyond the Loan Covenants
Learning Objectives
- Describe financial covenants including what is a covenant and why are they used
- Recognize the common type of financial covenants including the Current Ratio, Debt to Equity Ratio, and EBITDA formulas
- Identify and evaluate additional financial covenants including those dealing with Fixed-Charge Coverage, Net Worth, and the BBC
- Discuss creating, negotiating, setting, and monitoring financial covenants
- Identify the institution's recourse when a covenant has been broken
- Recognize and utilize case studies to summarize the webinar ideas
- Describe the current ratio
- Identify what a lender may not do
- Describe financial covenants
- Recognize formulas to calculate EBITDA
- Describe what Tangible (Adjusted) Net Worth is used for
- Identify the main purpose of the Fixed Charge Coverage (FCC) ratio
- Recognize the main purpose of the Borrowing Base Certificate (BBC)
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Accounting (2 hours)
Program Prerequisites
None
Advance Preparation
None
