A comprehensive and practical 2-day
workshop on understanding the key
financial ratios utilized in the credit risk
assessment of sovereigns, banks &
financial institutions, manufacturing &
service companies, and insurance
companies.
FINANCIAL RATIO ANALYSIS A CREDIT RATINGS PERSPECTIVE About the course
This practical two-day Financial Ratio Analysis Workshop is being offered with the basic
objective of imparting to participants the skills, approaches and techniques used in
financial ratio analysis of sovereigns, banks and other financial institutions,
manufacturing and service sector companies, and insurance companies. The
comprehensive 8-session programme will have a judicious mix of theory as well as
practical exercises relevant in the Caribbean context. The training will also include
extensive interactive discussions with the faculty experienced in credit ratings and
financial ratio analysis of companies across industries / sectors. By understanding the
credit ratings approach to financial ratio analysis, the participants will be able to enhance
their skills and knowledge, and also benefit from discussions with the faculty on the
various nuances in financial ratio analysis of sovereigns and corporates in the Caribbean.
About CariCRIS
CariCRIS is the Caribbean's first regional credit rating agency. It is a unique marketdriven initiative aimed at fostering and supporting the development of regional debt
markets in the Caribbean. CariCRIS’ mission is to contribute to the development of a
vibrant, integrated Caribbean capital market by setting the highest standards of credible
independent analysis and opinion to enable informed financial decisions. CariCRIS’
technical consultant, CRISIL Limited is the world’s fourth largest rating agency and an
associate company of Standard & Poor’s (S&P).
Who Should Attend?
The course should be of particular interest to:
• Credit analysts and loan officers from commercial banks, credit unions and other
lending institutions
• Fixed income analysts with brokerages and investment banks
• Risk analysts in banks, insurance companies and other financial institutions
• Analysts in the financial sector regulatory institutions
• Business graduates wishing to gain a clearer insight into practical aspects of
financial ratio analysis.
Expectations/ Qualifications of participants
• Basic professional qualifications relevant to business analysis, accounting &
finance or a basic knowledge of these areas borne out of practical experience.
Profile of the Facilitators
The facilitators for this training programme are senior rating professionals with over 40
man-years of combined experience in varied fields of financial analysis and economics.
The facilitators have executed several credit rating assignments across various industries
and have conducted many training sessions for credit officers and middle and senior
management staff in commercial banks, insurance companies and credit unions.
Course Coverage
Over the 8 sessions, the training programme will cover the following:
SESSION 1
• Ratio analysis of Sovereigns
¾ Fiscal Sector Ratios
o Current expenditure, current revenue, current balance, overall
fiscal balance, primary fiscal balance, gross domestic investment
and gross national savings.
¾ External Sector Ratios
o Current account balance, capital & financial account balance,
overall external balance, debt service ratio, import cover, gross
financing requirements and net foreign direct investment.
¾ Monetary Sector Ratios
o Credit to the private sector, capital adequacy ratio, nonperforming loans ratio and excess liquidity ratio.
SESSION 2
• Practical exercise requiring participants to calculate these ratios based on data
provided for a Caribbean sovereign and group discussion of the results.
SESSION 3
• Ratio analysis of Banks & Financial Institutions
¾ Profitability Ratios
o Net interest spread, return on assets, return on equity, efficiency
ratio
¾ Capitalisation Ratios
o Capital adequacy ratio, tangible net worth/adjusted assets, tangible
net worth/net non-performing loans
¾ Funding and Liquidity Ratios
o Deposits/total interest bearing liabilities, total loans/total customer
deposits, net funding gap
¾ Asset Quality Ratios
o Gross non-performing loans/gross loans, loan loss reserves/nonperforming loans
¾ Limitations of these financial ratios.
SESSION 4
• Practical exercise requiring participants to calculate these ratios based on data
provided for a Caribbean bank and group discussion of the results.
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SESSION 5
• Ratio analysis of Manufacturing Companies
¾ Profitability Ratios
o Gross profit margin, operating profit margin, EBITDA margin,
profit after tax margin, return on capital employed, return on
assets, earnings per share
¾ Solvency Ratios
o Net worth/total assets, total debt/net worth, total debt at book
value/equity at market value
¾ Debt Protection Ratios
o Average interest cost, net cash accruals/total debt, total
debt/EBITDA, interest cover, operating cash flow/total debt,
operating cash flow/debt servicing burden
¾ Liquidity Ratios
o Current ratio, quick ratio, working capital, cash ratio
¾ Activity & Efficiency Ratios
o Inventory days on hand, receivables days, trade creditors days,
gross current assets, working capital turnover, net fixed asset
turnover
¾ Limitations of these financial ratios.
SESSION 6
• Practical exercise requiring participants to calculate these ratios based on data
provided for a Caribbean manufacturing conglomerate and group discussion of
the results.
SESSION 7
• Ratio Analysis of Insurance Companies
¾ Understand the meaning and computation of capital adequacy ratio, loss
ratio, expense ratio, combined ratio, profitability ratios, liquidity ratios
and reserves.
SESSION 8
• Practical exercise requiring participants to calculate ratios based on data provided
for a Regional insurance company and group discussion of the results.
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