Introduction to Credit Analysis

This Introduction to Credit Analysis course introduces the basic concepts of credit analysis and its purpose.

In doing so it looks at the debt-equity spectrum and the relationship between equity and credit risk. Participants examine the different techniques and approaches to analysing the credit risk of an investment.

The course covers the main ratios used to identify and compare credit quality. Finally, participants will examine credit spreads and why there can sometimes be a disparity between credit ratings and bond market pricing.


This course is for individuals with a working knowledge of credit markets. A basic understanding of accounting would be preferable.

Learning Outcomes

  • At the end of this course delegates should understand
  • The purposed and methodology of credit analysis
  • The key ratios used in credit analysis
  • The link between credit risk and credit spread

Course Content

  • Purpose of credit analysis
  • Comparing the risk of two bonds
  • Relating equity and credit risk
  • The debt-equity spectrum
  • Capital structure
  • Business risk assessment
  • Macro vs. industry vs. company factors
  • Future outlook
  • Scoring business risk
  • Financial risk assessment
  • Understanding cash
  • Role of ratio analysis
  • Key credit ratios
  • Profitability and efficiency ratios
  • Coverage ratios
  • Leverage ratios
  • Cash flow adequacy ratios
  • Liquidity ratios
  • Macro comparative analysis
  • Exercises: Practical case studies of calculating key ratios
  • Relating credit risk and credit spread
  • Stylised credit yield curve
  • Disparity between credit ratings and market pricing


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