Financial Statement Mapping
Financial statements and tax returns are the foundation for understanding the financial condition of businesses and other economic entities. This foundation must be understood by anyone who is responsible for analyzing them to make a loan decision or manage credit risks posed by the lending function of the financial institution.
Economic events will typically start through an entry onto the income statement and the results of that event will find its way to the balance sheet. In other words, whatever occurs on the income statement will end up on the balance sheet. For example, if cash is not collected at the point of sales or an obligation is not settled at the point of incurrence, it will flow to the balance sheet either as an asset, liability or net worth account. There are other economic activities that will be reflected on the balance sheet without first going through the income statement.
Understanding the relationship between the balance sheet and the income statement will enhance an analyst knowledge of why certain items from the income statement and the balance sheet are matched mathematically in a ratio calculation to determine a company’s liquidity, leverage, asset management capabilities, and operating performance. It will also provide the secrets to understanding how a financial statement prepared on an accrual basis is converted into a cash basis financial statement to determine the amount of cash generated or used by an economic entity.
What You’ll Learn
- Have a better understanding of the income statement and the balance sheet
- Understand the flow of data from the income statement and other sources and how it will affect the balance sheet
- Understand the relationship between the income statement and balance sheet and how they are used to calculate financial / credit ratios and cash flow
- Understand the meaning of the accounts found on a typical income statement and balance sheet
- Know the types of economic transactions that will not flow through the income statement but will affect the balance sheet
Who Should Attend
Anyone involved in credit analysis or review including, but not limited to Senior Lending Officers, Senior Credit Officers, Chief Financial Officer, Board of Directors, Consumer Lenders, Commercial Lenders, Credit Analysts, Loan Review Personnel, Credit Administration Personnel, and Auditors.
Jeffery W. Johnson started his career with SunTrust Bank in Atlanta as a Management Trainee and progressed to Vice President and Senior Lender of SouthTrust Bank and Senior Vice President and Commercial Banking Division Manager for Citizens Trust Bank of Atlanta.
Most of his career has been spent in Credit Administration, Lending, Business Development, Loan Review, Management, and Training & Development. He has managed loan portfolios representing a cross section of loan types including: Large Corporate, High Net Worth Individual, Middle Market Companies, Small Business, Real Estate, and Non-Profit Organizations.
Mr. Johnson is now a training professional in the financial industry by leading various seminars covering important topics relating to issues in financial institutions. He teaches actively for fifteen state banking associations in the United States, Risk Management Association (RMA) and individual financial institutions nationwide. He co-authored a training course entitled “Lending to Service and Other Professional Organizations” for RMA in 2001.
Mr. Johnson earned a B.A. Degree in Accounting from Morehouse College in Atlanta; a MBA in Finance from John Carroll University in University Heights, Ohio; Banking diploma from Prochnow School of Banking at the University of Wisconsin and a Graduate Certificate in Bank Management from the Wharton School of Business at the University of Pennsylvania.
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