Money Management Academy

Welcome to our online course series on SME lending!

Small and Medium-sized Enterprises (SMEs) play a crucial role in driving economic growth and job creation in any country. However, in many developing nations, SMEs still face challenges in accessing financial services, particularly credit.

In this series, we will delve into the significance of SMEs for a country's economy and the obstacles they encounter while seeking financial support. Various lending methodologies have been developed to address these challenges, including collateral-based lending, relationship lending, credit scoring, individual cash-flow based lending, or a combination of these approaches.

Specifically, our series will focus on the cash-flow based lending approach, which is designed to assess an SME's financial health based on its cash flow patterns and performance indicators. This approach helps lenders make informed decisions and provide tailored financial solutions to SMEs, promoting sustainable growth and reducing credit risks.

The series is divided into 6 self-contained courses, each exploring different aspects of cash-flow based lending. Participants have the flexibility to take individual units or complete the entire course, gaining comprehensive insights into SME lending practices and contributing to the economic prosperity of their nations.

Join us on this enlightening journey to enhance your understanding of SME lending and make a positive impact on the growth of small businesses and economies alike.

Quantitative Financial Analysis in SME Lending

This is the third course of 6 related to SME lending. To grasp SME lending operations in financial institutions, it's advised to join all 6 courses. However, they can be taken individually based on interest.

Introduction to Financial Analysis – the quantitative Analysis

This chapter provides a course overview.

Introduction to Accounting

This unit provides an introduction to accounting tailored specifically to the needs of loan officers, serving as the groundwork for subsequent units covering various types of financial statements. The learning objectives encompass gaining a comprehensive understanding of accounting as the systematic process for recording and summarizing financial transactions, exploring the core objectives of accounting, and acquiring proficiency in the principles of double-entry bookkeeping.

The Balance Sheet

This course is designed to meet the specific needs of loan officers, providing an in-depth comprehension of balance sheets, encompassing assets, liabilities, and equity, along with crucial guidance for their evaluation. The primary learning objective is to achieve a thorough understanding of balance sheets, precise asset and liability valuation, and their critical role in assessing a company's financial health and stability as a loan officer.

The Income Statement / Profit and Loss Statement

This course on the Profit and Loss Statement covers key concepts such as revenues, expenses, the distinction between direct and fixed costs, and their impact on profitability. Various financial ratios, including the calculation of the gross profit margin and mark-up rate, are introduced. The objective of the course is to equip loan officers with a comprehensive understanding of the Profit and Loss Statement, its components, and how they influence the assessment of a company's profitability and repayment capacity. It provides practical insights into analyzing financial statements to facilitate informed lending decisions.

The Cash Flow Statement

In this comprehensive course, we delve deeply into the Cash Flow Statement, covering cash inflows and outflows, the various components of the statement (such as cash flow from operating, investing, and financing activities), and practical scenarios. Using real-life examples, we gain a deep understanding of differentiating the Cash Flow Statement from the Profit and Loss Statement. The primary learning objective is to provide a thorough understanding of the Cash Flow Statement, its composition, preparation methods, and its critical role in evaluating a company's liquidity and repayment capacity.

Cash Flow Forecasting

This course is designed for loan officers and focuses on cash flow projection. It covers how to estimate future cash flows, emphasizing the importance of accurate assumptions, consistency, and justification. The goal is to equip loan officers with the skills to create realistic and coherent cash flow projections, helping them assess a client's financial viability and make informed lending decisions.

Excursus:  Depreciation

This course comprehensively addresses the fundamentals of depreciation, encompassing calculation methods such as linear and declining balance depreciation, with a strong focus on clarifying their financial and tax implications. Moreover, the course explores the question of whether depreciation should be incorporated into financial analysis of SME clients. Ultimately, the course aims to empower loan officers and financial institutions with the knowledge and tools to effectively manage depreciation-related aspects of SME clients.

Excursus: Interest Expenses

This course covers interest expenses, their importance in financial statements, and financial institutions' varying approaches to handling them in Profit and Loss statements for SME clients. The course also explores the connections between Balance Sheets and Profit and Loss statements, particularly regarding interest expenses, and offers practical methods for loan officers to determine repaid principal and interest amounts.

Interested in SME lending? Stay tuned for courses delving deeper into this dynamic field.