Art & Science of Financial Risk Analysis
Art & Science of Financial Risk Analysis
Financial risk can be described as both an Art and a Science. Various ratio calculations and number crunching exercises represent the Science. The Art is the actual interpretation and decision-making process whereby all types of company information are reviewed in conjunction with the ratio calculations. The analyst makes a final decision, based on past experiences, overall industry knowledge, the firm's financial trends, as well as the completion of a risk/reward assessment.

This book is intended to help the reader develop the Art and Science of financial risk analysis. It will address the needs of credit analysts looking for the basics, as well as those seeking a more in-depth understanding of various financial analysis techniques, such as the calculation of unexpected loss projections on a given portfolio of customer accounts. The book was formatted to step you through an understanding of the basic credit concepts and then build from there. As a result, topics include cash flow analysis, profitability analysis using the DuPont Model, company break even analysis, the concept of Economic Value Added (EVA), a suggested approach to bank analysis, and derivatives risk analysis. A thorough explanation will be provided with regards to the concepts of sustainable growth, credit scoring models, and distress or bankruptcy default probability models using the Z score, bond score, and Lambda predictor models. In addition, it will cover bank letters of credit, risk mitigating techniques, recent bankruptcy law changes, "financial shenanigans" and financial "warning signs" as well as an overview of the various business structures such as LLC's and Subchapter S Corporations. Also included is a chapter on how to write a financial analysis and recommendation. Included from a personal investment perspective are investor tips on how to read financial statements along with suggested ratio calculations from stock performance measures. Paperback, 296 pages, 2006.

21.95