Introduction
The programme “Analyzing and Forecasting Liquidity Risk” develops professional practice in Finance. It connects the subject with workplace challenges by examining existing evidence and practices and choosing methods appropriate to the organization and its available resources.
The learning progresses from credit analysis and banking risk to investment appraisal and scenario development, with practical work on cash, liquidity, and working capital management, financial statement and report analysis, financial planning and budget development. Participants prepare outputs to support workplace application and review the quality and results of implementation.
Learning objectives
- Prepare a credit analysis and risk scenario showing repayment capacity and controls in an application related to “Analyzing and Forecasting Liquidity Risk”.
- Prepare a cash forecast and options for addressing liquidity and working capital gaps.
- Interpret performance, financial position, and cash flows using documented analysis with clear limitations.
- Build an integrated budget, test its scenarios, and monitor variances.
- Compare investment opportunities according to expected returns, risks, liquidity, and assumptions.
Learning areas
1. Credit Analysis and Banking Risk
- Analyze the financing purpose, repayment sources, and nature of the business, and review the financial and nonfinancial data needed to assess the customer.
- Assess cash flows, debt servicing capacity, and collateral, distinguishing the primary repayment source from supplementary protections.
- Classify relevant credit, market, liquidity, and operational risks, considering the applicable regulatory framework and internal policies.
- Test the effects of changes in revenues, prices, and maturities on repayment capacity, and define conditions and monitoring requirements addressing the identified risks.
- Prepare a documented recommendation covering limits, assumptions, information gaps, and warning indicators without turning the training case into an actual financing decision. The application examines a case related to “Analyzing and Forecasting Liquidity Risk”.
2. Cash, Liquidity, and Working Capital Management
- Analyze the cash cycle from purchasing to collection, identifying the effects of inventory, receivables, and payment terms on financing needs.
- Forecast receipts and payments by maturity, and document data sources and the likelihood of delays in expected cash flows.
- Classify receivables and debt aging, track collections and settlements, and connect follow-up actions to approved authorities and policies.
- Compare options for addressing deficits or deploying surpluses according to cost, liquidity, risk, and contractual constraints requiring review.
- Test a cash stress scenario, set alert thresholds and escalation actions, and update forecasts based on actual results.
3. Financial Statement and Report Analysis
- Read the relationships between the statements of financial position, performance, and cash flows and the notes, identifying the effects of accounting policies and estimates.
- Perform horizontal and vertical analysis and compare profitability, liquidity, efficiency, and leverage indicators, considering the nature and size of the business.
- Examine earnings quality, cash flows, and nonrecurring items, and identify differences between accounting results and actual liquidity.
- Test the sensitivity of results to changes in sales, costs, collections, and financing, stating the assumptions and constraints in each scenario.
- Write a financial report linking indicators to management's question and available alternatives, presenting risks and additional data needed for the decision.
4. Financial Planning and Budget Development
- Translate objectives into quantitative assumptions for sales or services and resources, identifying the owner and data source of each estimate.
- Build revenue, expenditure, and capital budgets and link them to cash flows, checking consistency across supporting plans.
- Compare fixed budgets, flexible budgets, and rolling forecasts, and select an approach suited to business volatility and decision frequency.
- Test base, conservative, and optimistic scenarios, and analyze the effects of the variables with the greatest influence on results and liquidity.
- Prepare a variance report distinguishing changes in volume, price, and efficiency, and propose actions, responsibilities, and follow-up dates.
5. Investment Appraisal and Scenario Development
- Define the investment objective, time horizon, constraints, and risk tolerance, separating organizational objectives from individual preferences.
- Collect cash flow, cost, demand, and financing data, document sources, and distinguish actual historical data from forecasts.
- Compare appraisal methods suited to the case, examining discount rate, growth, and terminal value assumptions and the comparability of alternatives.
- Conduct sensitivity and scenario analysis for risk, liquidity, and concentration, stating that estimated results do not guarantee future returns.
- Prepare a decision memo presenting the benefits and risks of alternatives and the gaps requiring further due diligence before an investment decision.
Practical outputs
- A credit memo, risk register, and early warning indicators.
- A cash flow forecast and a plan to improve collections and the cash conversion cycle.
- A comparative financial analysis report and a memo of findings and assumptions.
- An operating and cash budget, assumptions register, and variance report.
- An investment appraisal model, sensitivity analysis, and memo comparing alternatives.
Who should attend
- Practitioners, specialists and supervisors whose work relates to the programme subject.
- Managers and teams working in finance, according to their practical responsibilities.
- Professionals responsible for applying the outputs of “Analyzing and Forecasting Liquidity Risk” within their organizations.
Prerequisites
- Working familiarity with the programme field and the ability to discuss a professional case or challenge.
- Confirm the suitability of your experience and any specialist prerequisites with the Union before participation.
Conclusion
The programme “Analyzing and Forecasting Liquidity Risk” brings together concepts, case review and a practical application. Participants prepare steps that can be adapted to their responsibilities and organizational resources, with an indicator to follow application and review results after returning to work.
Participation arrangements and any special requests are specified in the confirmation issued by the Union.