Skip to content
Felix
  • Topics
    • My List
    • Felix Guide
    • Asset Management
    • Coding and Data Analysis
      • Data Analysis and Visualization
      • Financial Data Tools
      • Python
      • SQL
    • Credit
      • Credit Analysis
      • Restructuring
    • Financial Literacy Essentials
      • Financial Data Tools
      • Financial Math
      • Foundations of Accounting
    • Industry Specific
      • Banks
      • Chemicals
      • Consumer
      • ESG
      • Insurance
      • Oil and Gas
      • Pharmaceuticals
      • Project Finance
      • Real Estate
      • Renewable Energy
      • Technology
      • Telecoms
    • Introductory Courses
    • Investment Banking
      • Accounting
      • Financial Modeling
      • M&A and Divestitures
      • Private Debt
      • Private Equity
      • Valuation
      • Venture Capital
    • Markets
      • Economics
      • Equity Markets and Derivatives
      • Fixed Income and Derivatives
      • Introduction to Markets
      • Options and Structured Products
      • Other Capital Markets
      • Securities Services
    • Microsoft Office
      • Excel
      • PowerPoint
      • Word & Outlook
    • Professional Skills
      • Career Development
      • Expert Interviews
      • Interview Skills
    • Risk Management
    • Transaction Banking
    • Felix Live
  • Pathways
    • Investment Banking
    • Asset Management
    • Equity Research
    • Sales and Trading
    • Commercial Banking
    • Engineering
    • Operations
    • Private Equity
    • Credit Analysis
    • Restructuring
    • Venture Capital
    • CFA Institute
  • Certified Courses
  • Ask An Instructor
  • Support
  • Log in
  • Topics
    • My List
    • Felix Guide
    • Asset Management
    • Coding and Data Analysis
      • Data Analysis and Visualization
      • Financial Data Tools
      • Python
      • SQL
    • Credit
      • Credit Analysis
      • Restructuring
    • Financial Literacy Essentials
      • Financial Data Tools
      • Financial Math
      • Foundations of Accounting
    • Industry Specific
      • Banks
      • Chemicals
      • Consumer
      • ESG
      • Insurance
      • Oil and Gas
      • Pharmaceuticals
      • Project Finance
      • Real Estate
      • Renewable Energy
      • Technology
      • Telecoms
    • Introductory Courses
    • Investment Banking
      • Accounting
      • Financial Modeling
      • M&A and Divestitures
      • Private Debt
      • Private Equity
      • Valuation
      • Venture Capital
    • Markets
      • Economics
      • Equity Markets and Derivatives
      • Fixed Income and Derivatives
      • Introduction to Markets
      • Options and Structured Products
      • Other Capital Markets
      • Securities Services
    • Microsoft Office
      • Excel
      • PowerPoint
      • Word & Outlook
    • Professional Skills
      • Career Development
      • Expert Interviews
      • Interview Skills
    • Risk Management
    • Transaction Banking
    • Felix Live
  • Pathways
    • Investment Banking
    • Asset Management
    • Equity Research
    • Sales and Trading
    • Commercial Banking
    • Engineering
    • Operations
    • Private Equity
    • Credit Analysis
    • Restructuring
    • Venture Capital
    • CFA Institute
  • Certified Courses
Felix
  • Data
    • Company Analytics
    • My Filing Annotations
    • Market & Industry Data
    • United States
    • Relative Valuation
    • Discount Rate
    • Building Forecasts
    • Capital Structure Analysis
    • Europe
    • Relative Valuation
    • Discount Rate
    • Building Forecasts
    • Capital Structure Analysis
  • Models
  • Account
    • Edit my profile
    • My List
    • Restart Homepage Tour
    • Restart Company Analytics Tour
    • Restart Filings Tour
  • Log in
  • Ask An Instructor
    • Email Our Experts
    • Felix User Guide
    • Contact Support

Credit Analysis Case in Point

A case study reviewing Smithy's (a fictitious glass manufacturing company) overall credit risk with a focus on its business risk, financial risk, corporate structure, and debt capacity.

Unlock Your Certificate   
 
0% Complete

18 Lessons (38m)

Show lesson playlist
  • Description & Objectives

  • 1. Introduction Part 1

    02:23
  • 2. Introduction Part 2

    02:49
  • 3. Business Risk

    02:44
  • 4. Financial Risk

    00:47
  • 5. Debt and Other Obligations

    01:52
  • 6. Debt and Other Obligations Review

    00:52
  • 7. Working Capital

    02:26
  • 8. EBITDA and Margins Analysis

    00:56
  • 9. EBITDA Adjustments

    02:02
  • 10. EBITDA Adjustments Review

    00:40
  • 11. Cash Flow Calculations

    02:52
  • 12. Cash Flow Review

    01:00
  • 13. Liquidity Analysis

    03:19
  • 14. Financial Risk Summary

    01:17
  • 15. Debt Capacity Introduction

    01:49
  • 16. Debt Capacity Calculations

    05:26
  • 17. Debt Capacity Review

    01:39
  • 18. Case Summary

    02:51

Prev: An Introduction to Analyzing Credit Risk Next: Debt Capacity

Liquidity Analysis

  • Notes
  • Questions
  • Transcript
  • 03:19

A review of Smithy's liquidy position

Downloads

Credit-CiP-Liqudity-EmptyCredit-CiP-Liqudity-Full

Glossary

Liquidity Position Liquidity Ratio Liquidity Sources Liquidty Uses
Back to top
Financial Edge Training

© Financial Edge Training 2025

Topics
Introduction to Finance Accounting Financial Modeling Valuation M&A and Divestitures Private Equity
Venture Capital Project Finance Credit Analysis Transaction Banking Restructuring Capital Markets
Asset Management Risk Management Economics Data Science and System
Request New Content
System Account User Guide Privacy Policy Terms & Conditions Log in
Transcript

Right, let's look at the liquidity forecast for Smith Inc. We're gonna summarize liquidity sources and we're gonna summarize liquidity uses. We start by linking in the forecast cash and cash equivalents in year one.

42.2, and then we want to use the funds from operations only if that provides liquidity. This is sources of liquidity, so we're gonna do a max function here.

And we see that because funds from operations is a positive number, it comes in here as a source of liquidity. Then we look at the forecast change in operating working capital and also only if it's a positive.

And it is a positive, so we're gonna link 5.7 in there as well. And then we have hard coded in the total undrawn bank lines available for Smith Inc, so that would be a source of liquidity, of course. And then we summarize all of that for that year, and it's 178.6. Then on the uses side, funds from operations, if that was a negative, it would come in here. So I'm just gonna copy the positive number here in the sources, put that in, and make that a minus, the min function instead, and I'm gonna do the same for the forecast change in operating working capital.

And then a typical use, of course, would be capital expenditure. I'm gonna put a minus sign there.

And then finally, I'm gonna link in the mandatory debt repayments here.

And those mandatory debt repayments are zero in the first forecast here. And now I can summarize my total uses of liquidity as well. I go down and I look at my liquidity ratio, 178.6 worth of sources. Compare that for 49.3 of uses, and I got a really healthy liquidity ratio of 3.6. And then of course, we could just copy these numbers across and see what happens with the liquidity position over the next couple of years.

Content Requests and Questions

You are trying to access premium learning content.

Discover our full catalogue and purchase a course Access all courses with our premium plans or log in to your account
Help

You need an account to contact support.

Create a free account or log in to an existing one

Sorry, you don't have access to that yet!

You are trying to access premium learning content.

Discover our full catalogue and purchase a course Access all courses with our premium plans or log in to your account

You have reached the limit of annotations (10) under our premium subscription. Upgrade to unlock unlimited annotations.

Find out more about our premium plan

You are trying to access content that requires a free account. Sign up or login in seconds!

Create a free account or log in to an existing one

You are trying to access content that requires a premium plan.

Find out more about our premium plan or log in to your account

Only US listed companies are available under our Free and Boost plans. Upgrade to Pro to access over 7,000 global companies across the US, UK, Canada, France, Italy, Germany, Hong Kong and more.

Find out more about our premium plan or log in to your account

A pro account is required for the Excel Add In

Find out more about our premium plan

Congratulations on completing

This field is hidden when viewing the form
Name(Required)
This field is hidden when viewing the form
Rate this course out of 5, where 5 is excellent and 1 is terrible.
Were the stated learning objectives met?(Required)
Were the stated prerequisite requirements appropriate and sufficient?(Required)
Were the program materials, including the qualified assessment, relevant and did they contribute to the achievement of the learning objectives?(Required)
Was the time allotted to the learning activity appropriate?(Required)
Are you happy for us to use your feedback and details in future marketing?(Required)

Thank you for already submitting feedback for this course.

CPE

What is CPE?

CPE stands for Continuing Professional Education, by completing learning activities you earn CPE credits to retain your professional credentials. CPE is required for Certified Public Accountants (CPAs). Financial Edge Training is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors.

What are CPE credits?

For self study programs, 1 CPE credit is awarded for every 50 minutes of elearning content, this includes videos, workouts, tryouts, and exams.

CPE Exams

You must complete the CPE exam within 1 year of accessing a related playlist or course to earn CPE credits. To see how long you have left to complete a CPE exam, hover over the locked CPE credits button.

What if I'm not collecting CPE credits?

CPE exams do not count towards your FE certification. You do not need to complete the CPE exam if you are not collecting CPE credits, but you might find it useful for your own revision.


Further Help
  • Felix How to Guide walks you through the key functions and tools of the learning platform.
  • Playlists & Tryouts: Playlists are a collection of videos that teach you a specific skill and are tested with a tryout at the end. A tryout is a quiz that tests your knowledge and understanding of what you have just learned.
  • Exam: If you are collecting CPE points you must pass the relevant CPE exam within 1 year to receive credits.
  • Glossary: A glossary can be found below each video and provides definitions and explanations for terms and concepts. They are organized alphabetically to make it easy for you to find the term you need.
  • Search function: Use the Felix search function on the homepage to find content related to what you want to learn. Find related video content, lessons, and questions people have asked on the topic.
  • Closed Captions & Transcript: Closed captions and transcripts are available on videos. The video transcript can be found next to the closed captions in the video player. The transcript feature allows you to read the transcript of the video and search for key terms within the transcript.
  • Questions: If you have questions about the course content, you will find a section called Ask a Question underneath each video where you can submit questions to our expert instructor team.