Many community financial institutions rely on traditional EBITDA analysis in determining
borrower repayment ability. But does EBITDA provide everything we need to know? What
about considerations for capital expenditures and dividends provided to entity ownership?
Are we missing key elements which drive the borrower’s ability to generate satisfactory
cash to satisfy repayment requirements?
We'll review traditional EBITDA
analysis, including adjustments which should be considered to EBITDA in determining
borrower repayment ability. We'll also address the Uniform Credit Analysis, specifically net
cash after operations and UCA cash flow coverage. Other debt service coverage
considerations, such as the free cash flow method for determining repayment ability,
including considerations for capital expenditures and how these expenditures impact the
borrower’s repayment ability will be included.