Objectives On completion of this tutorial, you will be able to:

• Construct a typical statement of cash flows
• Recognize the importance of the cash conversion cycle
• Calculate the impact of changes to key parameters on a company's cash flow
• Define EBITDA and recognize its limitations as a measure of cash flow
• Identify the structural features of balance sheets that can have adverse cash flow implications
• Recognize the value of cash flow forecasts and the need to stress test such forecasts

Tutorial Overview This tutorial looks at the statement of cash flows, and describes the cash conversion cycle and its impact on working capital ratios. Working capital days measures are also covered, including the use of such measures to identify the drivers of cash flow from operations. Other measures, such as EBITDA, are also explained, along with balance sheet structural elements - such as overleverage - that can have adverse cash flow implications. Finally, the topic of cash flow forecasting and associated stress testing are also introduced. A good understanding of these measures, and accounting policies and practices to look out for, will help credit analysts and others to understand the key drivers of a company's cash flow. Prerequisite Knowledge Credit Analysis - Income Statement Analysis Tutorial Level: Intermediate Tutorial Duration: 75 minutes