The Credit Analyst Training course

Apply a step-by-step credit risk analysis framework to assess a company's risk by first collecting information in the company overview, understanding its business model, products, services, and geography.

Evaluate the company's business risk factors by analyzing operations' strengths and weaknesses, market position, geographic and product diversification, industry strengths or weaknesses, and the competitive landscape, to compare firms.

Assess financial risk factors by evaluating financial flexibility, sales growth, profitability margins, liquidity, funding diversity, and cash flow. Use credit ratio analysis to position similar companies against each other.

Form an overall judgment on a company's credit risk by evaluating business and financial risk factors as high, medium, or low, then aggregate to a multi-dimensional risk view.

Quantify credit risk by translating risk assessments into a cost of funding, using a framework that combines a risk-free rate with a credit spread, then compare two real-life companies.

Apply the credit risk framework to assess a company's business and financial risks, map factors to high, medium, or low, and visualize results on a risk grid for practical comparison.

Explore the credit risk analysis framework with Coca-Cola and Kellogg’s through a step-by-step, interactive practice that lets you analyze real companies and receive feedback.

Identify three main sources for credit risk analysis: company reports with annual and quarterly filings, financial databases, and industry reports with expert interviews.

Apply the credit risk analysis framework to Coca-Cola by starting with the company overview, examining its business model, products, geographies, and other sources.

Examine Coca-Cola's product range, brands, geography, and the world's largest beverage distribution system to assess credit risk, noting it is the world's largest non-alcoholic beverage company with 500+ brands.

Shows Coca-Cola as the world’s largest non-alcoholic beverages company. Covers operations in 200+ countries and the business model, bottling, and distribution networks, with Pepsi as a main competitor.

Assess business risk factors for Coca-Cola within the credit risk analysis framework, linking industry dynamics and competitive position to how operations may be affected.

Identify seven risk factors for food and beverage firms, and evaluate Coca-Cola against scale of operations, diversification, distribution channel, industry growth, brand equity, raw material sourcing, and mergers and acquisitions.

Assess the scale risk factor for Coca-Cola via a qualitative, fact-based evaluation of its market leadership in carbonated soft drinks, showing economies of scale, pricing power, and a low risk.

Assess Coca-Cola's diversification across brands, product categories, and geographies. With 500+ brands, 21 above $1 billion, and operations in 200+ countries, diversification remains a low-risk factor.

Assess distribution channel risk for Coca-Cola by examining its extensive bottling and retail network, long-term bottler contracts, and cost efficiencies that enable faster product launches and higher profitability.

Assess the industry growth risk for Coca-Cola as demand shifts toward healthier beverages away from carbonated soft drinks, while expanding bottled and flavoured water in emerging markets.

Assess Coca-Cola's brand equity, recognizing strong recognition and loyalty, top ranking among global brands, and pricing power that supports higher profitability margins, yielding low overall risk.

Assess raw material sourcing risk for Coca-Cola, noting water, sweeteners, and fruit pulp supplies are robust through diverse, long-term contracts; price fluctuations do not threaten margins, ensuring business continuity.

Assess Coca-Cola's acquisition risk as low, based on the successful integration of Vitaminwater, moderate deal sizes, robust cash flows, and large cash reserves for future acquisitions.

Evaluate Coca-Cola’s business risk across seven factors, noting low risk in scale, diversification, distribution, brand equity, raw materials, and mergers and acquisitions, with medium risk in industry growth.

Analyze Coca-Cola's five financial risk factors: sales growth, profitability, liquidity, coverage, and leverage, using the last five statements to calculate key metrics in Excel.

Download the Excel template attached to this module and practice along with the instructor's illustrations for hands-on learning.

Analyze Coca-Cola's income statement data from 2013 to the first nine months of 2017, covering revenues, gross profit, EBITDA, EBIT, interest expense, and net income.

Analyze Coca-Cola's balance sheet by examining assets, equity trends, debt growth, and cash positions from 2013 to 2017, including current assets and liabilities.

Analyze Coca-Cola’s cash flow statement, highlighting cash flow from operations falling from 10.5B in 2013 to 6B in nine months 2017, with shifts in cash flow from investments and financing.

Analyze Coca-Cola's financials across the income statement, balance sheet, and cash flow statement from 2013 to 2017, noting that 2017 figures cover nine months.

Calculate Coca-Cola's revenue growth rate from 2013 to 2017, handle missing 2012 data and mark 2013 as n/a, apply the growth formula, and note negative 2% growth in 2014.

Learn to annualize revenue from the first 9 months of 2017 and compute a growth rate using Coca-Cola 2016 as a baseline to reveal a negative 11% growth.

The lecture analyzes Coca-Cola's declining revenue growth rate over five years, with forecasts to drop 11% in 2017, highlighting a high risk factor in credit risk assessment.

Compute Coca-Cola's gross profit margin by dividing gross profit by revenue, illustrating 2013 and 2017 calculations and noting 9-month figures need not be annualized.

Calculate Coca-Cola's EBITDA margins as a percentage of revenue for 2013, yielding about 26%, and note the stability with a brief dip and recovery as a low risk factor.

Assess Coca-Cola’s EBIT margins as a low risk factor by calculating EBIT as a percentage of revenue from 2013 to 2017, showing profitability around 22%.

Explore Coca-Cola's leverage ratio calculation for 2013 by computing net debt (total debt minus cash and cash equivalents) divided by total shareholders' equity, highlighting capital structure and financial risk.

Assess Coca-Cola's leverage risk by evaluating the net debt to equity trend, which rose from 0.5 to 1 and remains below the 1 threshold, signaling medium risk.

Calculate Coca-Cola's net debt to ebitda to assess debt repayment from profits, and note annualizing ebitda for full-year comparison for balance-sheet versus income-statement figures.

Explore the coverage ratio using EBITDA to interest and EBIT to interest to assess the ability to repay debt, illustrated by 2013 EBITDA divided by 2013 interest equals 26 times.

Assess Coca-Cola's coverage risk by analyzing the EBITDA to interest ratio, which fell from 26 in 2013 to 11, indicating a medium risk trend over the last five years.

Evaluate liquidity risk by analyzing the current assets to current liabilities ratio. The 2013 example yields 1.1, signaling that current assets cover current liabilities and indicate a healthy, low-risk profile.

Assess Coca Cola's cash to total assets ratio to gauge liquidity risk, calculated as cash holdings divided by total assets; a rising trend toward about 30% signals stronger liquidity.

Assess Coca-Cola's liquidity risk by confirming cash flow from operations covers cash flow from investments, using an Excel if test to yield Yes when positive, indicating low liquidity risk.

Explore the fourth step of the credit risk analysis framework to assess the overall credit risk of the Coca-Cola Company.

Explore how three major rating agencies globally assess credit risk using the AAA to D scale. Apply these concepts to Coca-Cola's credit risk within investment-grade BBB and non-investment ratings.

Learn how S&P Global Ratings uses a six-level business risk and a six-level financial risk framework to assign benchmark ratings like AAA, AA+, BBB, and BBB- to Coca-Cola.

Assesses Coca-Cola's business risk profile as low overall, with six of seven factors showing low risk, including diversification, distribution channels, brand equity, raw material sourcing, and mergers and acquisitions.

Evaluate Coca-Cola's financial risk by examining sales growth, profitability, leverage, coverage, and liquidity, finding high risk in sales growth, low risk in profitability and liquidity, and an overall medium risk.

Assess Coca-Cola's credit risk using S&P criteria, placing business risk as excellent and financial risk as modest to intermediate, suggesting a rating near AA, A+, or A.

Quantify Coca-Cola's credit risk in step 5 by translating its AA, A+ or A rating into the corresponding cost of financing for a $1 billion, 10-year loan.

Learn to calculate credit risk spreads—the extra return above the risk-free rate—by proxying Coca-Cola with AA/A+ rated U.S. food and beverages peers.

Compute the credit risk spread for the U.S. food and beverages sector by averaging AA, A+, and A spreads (0.3%, 0.4%, 0.7%), yielding about 0.47% for Coca-Cola.

Calculate Coca-Cola's financing cost by adding a 0.47% credit risk spread to the risk-free rate, yielding 3.13% for a 10-year loan based on Bloomberg data as of Jan 22, 2018.

Share your feedback at the end of this module to help improve the course and benefit thousands of students worldwide, guiding Skillfin Learning to be a better place to learn.

Recap five step credit risk analysis framework, evaluating business risk factors, financial risk factors, and then assigning a credit rating via S&P global ratings, culminating in the cost of financing.

Engage in step 1 of the credit risk analysis by performing a company overview of Kellogg’s, detailing products, brands, geographies, operations, and competitors, then submit your findings for feedback.

Conduct step 2 credit risk analysis for Kellogg’s, evaluating seven business risk factors, outlining qualitative implications, and assigning low, medium, or high risk with color indicators.

Evaluate Kellogg's financial risk factors across five metrics for 2013–2017 using the same framework as Coca-Cola, with the provided Excel dataset, and email your results for feedback.

Assess Kellogg’s business and financial risk using S&P Global criteria, rank on a 1–6 scale, and submit your findings for feedback, as in the Coca-Cola assignment.

Calculate Kellogg’s 10-year, $1 billion financing cost by combining the U.S. 10-year risk-free rate with sector credit spreads (AA, A+, A, BBB) to quantify credit risk.