Module 1 · 3 hours · Free access
Credit fundamentals and business risk
- Loan purpose and repayment
- Business model and industry exposure
- Evidence and independent judgment
Weitl Enterprises LLCWorld-changing Skills...Enhanced
Commercial credit education
Credit Analyst
Training Program
Learn to evaluate a business, interpret its financial statements, and make a supported credit recommendation.
Modules 1–3 free · Modules 4–8 paid
Start the free lessonsExplore all modules
Your learning path
Start with 11 hours of free foundational learning. Each topic includes instruction, a worked example, and multiple-choice questions with explanations. Each module ends with a 10-question skills assessment, with 80% as the passing threshold.
Module 2 · 4 hours · Free access
Financial statements and information quality
- How the statements connect
- Spreading and comparability
- Quality of earnings and assets
Module 3 · 4 hours · Free access
Ratios and the operating cycle
- Liquidity and working capital
- Profitability and leverage
- Cash conversion and growth
Module 4 · 5 hours · Paid module
Cash flow and repayment capacity
- From EBITDA to cash available
- Debt service coverage and timing
- Global repayment analysis
Included with paid enrollment
View access details →Module 5 · 4 hours · Paid module
Forecasting and stress testing
- Build a supported forecast
- Stress material risks
- Size debt to repayment capacity
Included with paid enrollment
View access details →Module 6 · 4 hours · Paid module
Collateral and guarantor support
- Value and recoverability
- Borrowing base and availability
- Guarantees and loss severity
Included with paid enrollment
View access details →Module 7 · 4 hours · Paid module
Loan structure and credit controls
- Match the facility to the need
- Covenants and reporting
- Approval and funding conditions
Included with paid enrollment
View access details →Module 8 · 4 hours · Paid module
Risk ratings monitoring and the credit recommendation
- Risk ratings grounded in evidence
- Monitoring and early response
- Write a defensible recommendation
Included with paid enrollment
View access details →Continue with the full program
Paid enrollment will include Modules 4–8, their practice questions and skills assessments, and the final applied credit case. The full program requires at least 80% in every module and 80/100 on the final case, including essential judgment checks.
Spring 2027 enrollment opens November 1, 2026
Pricing and enrollment details will be available here when registration opens. You can complete Modules 1–3 now without payment or an account.
Learn one concept at a time
- Read the lesson and its example, then answer both practice questions before opening the explanations.
- Review any mistakes and explain the correct reasoning before continuing to the next topic.
- Take the module assessment using only the formula reference and a calculator. Eight correct answers out of ten meets the 80% knowledge threshold.
These browser assessments are learning self-checks. Formal course completion requires controlled assessment and the final practical case. An 80% test score is evidence against the course standard; it does not by itself establish independent professional competence.
Examples use dollars and simplified US commercial-lending conventions. Apply your institution’s current policies in live work. Scores stay in this page only and clear on reload; export your self-check record before closing.
Module 1 · 3 hours
Credit fundamentals and business risk
1.1 Loan purpose and repayment
Learning objective Identify a financing need and distinguish primary repayment from fallback recovery.
Credit analysis asks whether a specific borrower can repay a specific obligation on its agreed terms. Begin with the amount, purpose, legal borrower, timing of the need, and proposed repayment schedule. Then explain the cash-generating event that repays the loan. A seasonal inventory line may be repaid when inventory is sold and receivables are collected. Equipment debt is normally repaid from cash generated over several operating periods.
Primary repayment is the expected ordinary source of payment. Secondary repayment is a fallback, such as enforceable collateral liquidation or a capable guarantor. Neither collateral value nor a lender's willingness to refinance establishes operating repayment capacity. Specialized asset-based lending relies more heavily on collateral conversion and controls; this course begins with ordinary cash-flow-based commercial lending.
Use the five Cs as prompts: character, capacity, capital, collateral, and conditions. Character concerns documented conduct and reliability. Capacity concerns cash to pay. Capital absorbs losses. Collateral supports recovery. Conditions include industry, transaction, and economic factors. They organize inquiry; they do not replace evidence.
Worked example
A distributor needs $300,000 for holiday stock and expects collections in January. Trace purchases, sales, and collections before recommending a seasonal line. A five-year machine needs a different repayment structure.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
1.1.1. What most directly supports repayment of an equipment term loan?
1.1.2. Which question should be resolved first for a new request?
Answer and explanation for 1.1.1
B. Recurring cash supports scheduled payments. An invoice supports cost, enthusiasm is not cash, and uncommitted refinancing is uncertain.
Answer and explanation for 1.1.2
C. Purpose and repayment drive the analysis and structure; the other facts can inform later work.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
1.2 Business model and industry exposure
Learning objective Translate an operating risk into a financial consequence and a useful evidence request.
Map how the company earns cash: customers, products, pricing, suppliers, production, delivery, invoicing, and collection. Ask which part of that chain could fail. Identify concentration by customer, supplier, geography, and product. A customer representing 40% of revenue creates a different risk from a portfolio of small, independent customers, even when total revenue is identical.
Distinguish a risk from its consequence and its mitigation. A single-source supplier is a risk; interrupted production and lost cash receipts are consequences; a qualified alternative supplier with sufficient capacity may mitigate it. An untested management intention is weaker than an executed arrangement.
Examine cyclicality, competition, substitution, regulation relevant to the business, and management's ability to respond. Compare management's forecast with its prior forecasting record. Ask for customer contracts, backlog detail, cancellation rights, supplier terms, and contingency plans. A long company history is useful context but does not neutralize a new exposure. Connect each material business risk to revenue, margin, working capital, or debt service.
Worked example
A manufacturer relies on one supplier for a critical part. Ask about substitute qualification time and inventory coverage, then model the cash effect of a production interruption.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
1.2.1. A customer provides 45% of sales. What is the strongest next step?
1.2.2. Which mitigation is best supported?
Answer and explanation for 1.2.1
C. This gathers evidence about both likelihood and impact. Concentration calls for analysis, not an automatic conclusion.
Answer and explanation for 1.2.2
D. Qualification, capacity, and terms make the alternative actionable; assertions alone do not.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
1.3 Evidence and independent judgment
Learning objective Separate verified facts from assumptions and escalate unresolved issues.
Build a request list before forming a recommendation: financial statements and notes, interim results, tax information as appropriate, bank and debt schedules, receivable and inventory aging, ownership details, and the proposed use of proceeds. Identify the source, date, scope, and limitations of each item. Management-prepared information can be useful but requires reconciliation and appropriate corroboration.
Separate facts, assumptions, and conclusions in working papers. For example, a signed contract is evidence; automatic renewal is an assumption unless supported; sufficient future cash is a conclusion that still needs analysis. A discrepancy is a reason to investigate, not proof of fraud. Obtain explanations, compare independent records, and escalate unresolved material differences under policy.
Maintain independent credit judgment even when a relationship is profitable or a deadline is urgent. Disclose conflicts, protect borrower information in approved systems, use relevant and consistently applied credit criteria, and route legal or compliance questions to qualified staff. Approval authority belongs to the designated decision maker; an analyst documents and recommends.
Worked example
Management reports $600,000 of debt, but the debt schedule totals $850,000. Reconcile the difference before finalizing leverage and debt service; do not silently choose the smaller balance.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
1.3.1. Two sources show materially different debt balances. What should the analyst do?
1.3.2. A sales manager asks you to remove a material weakness from the memo. What is appropriate?
Answer and explanation for 1.3.1
B. The difference can change repayment capacity. Averaging or selecting a convenient amount conceals uncertainty.
Answer and explanation for 1.3.2
A. Decision makers need an accurate record. Commercial pressure does not change the underlying evidence or approval authority.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
Guided workshop
Use the Maple Industrial Supply financial information below for this module.
Use the Maple Industrial Supply workshop case and the information relevant to this module.
Use a fictional local wholesaler. Write five evidence requests, map one business risk to cash flow, and identify primary and secondary repayment. Debrief which statements are facts and which need verification.
Module 1 skills assessment
10 questions · 30 minutes · 10 points each · Pass at 8 of 10 or 80%
Use only the formula reference and calculator. Select one best answer. Formal results require controlled administration by the instructor.
Learner __________________ Date __________ Correct ____ / 10 Score ____ % Assessor __________________
Module 2 · 4 hours
Financial statements and information quality
2.1 How the statements connect
Learning objective Explain why profit, equity, and cash change differently.
The balance sheet reports assets, liabilities, and equity at a date. Assets equal liabilities plus equity. The income statement measures revenue and expenses over a period. The cash flow statement reconciles cash movements across operating, investing, and financing activities. The equity statement explains changes such as earnings, owner contributions, and distributions. Read the notes for policies, commitments, contingencies, and related parties.
Accrual accounting records activity when earned or incurred, which may differ from payment timing. A credit sale can increase revenue and receivables while producing no immediate cash. Depreciation reduces accounting profit without being a current-period cash payment; the asset purchase used cash separately. Borrowing creates cash and a liability, not operating revenue.
Check that assets equal liabilities plus equity, ending cash agrees across statements, and equity changes reconcile. These checks catch errors but do not establish asset quality or detect every omission. Analyze the complete statement set and the underlying business rather than interpreting a single line in isolation.
Worked example
A company starts with $200,000 equity, earns $80,000, and distributes $30,000. With no other equity movements, ending equity is $250,000. The distribution reduces cash and equity, not operating profit.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
2.1.1. A $50,000 credit sale is recorded before collection. Which statement is correct?
2.1.2. Receiving loan proceeds normally increases which pair?
Answer and explanation for 2.1.1
B. Accrual recognition can precede cash collection; the profit effect also depends on the associated costs.
Answer and explanation for 2.1.2
C. Borrowing is a financing transaction that increases cash and the obligation to repay.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
2.2 Spreading and comparability
Learning objective Prepare a consistent financial spread and document adjustments.
A financial spread places reported accounts into consistent categories across periods. Record the entity, reporting basis, currency, units, period length, source, and assurance level. Keep reported and adjusted figures traceable. Compare annual periods with annual periods and interim periods with the same prior-year interval. Avoid simply multiplying a seasonal quarter by four.
Separate operating assets from nonoperating assets and short-term obligations from longer-term debt using the statement basis and applicable requirements. Identify the current portion of long-term debt so that near-term obligations are not understated. Reconcile the debt schedule to the statements, including maturities and scheduled payments.
Use common-size analysis to express income statement items as a percentage of sales and balance sheet items as a percentage of assets. It makes changes easier to compare but does not explain their cause. Investigate changes using notes and supporting schedules. Never alter reported numbers merely to meet a lending threshold; adjustments require a documented rationale and any required approval.
Worked example
Sales of $2.0 million with $1.4 million cost of goods sold produce a 30% gross margin. Compare that percentage with prior periods and explain whether pricing, mix, or costs changed.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
2.2.1. Which comparison best handles a seasonal business?
2.2.2. What makes an adjusted spread reviewable?
Answer and explanation for 2.2.1
B. Matching seasonal periods reduces timing distortion; an annual forecast still needs a full operating model.
Answer and explanation for 2.2.2
D. The reviewer can reproduce the adjustments and judge whether they are justified.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
2.3 Quality of earnings and assets
Learning objective Identify unsupported earnings adjustments and doubtful asset values.
Reported earnings may include one-time gains, unusual costs, or accounting estimates that affect recurring performance. Identify the item, verify its amount, evaluate whether it will recur, and explain its cash effect. A recurring expense does not become an acceptable add-back because management calls it discretionary. A one-time gain may need removal from recurring earnings.
Review receivable aging, subsequent collections, customer disputes, inventory aging, obsolescence, and related-party balances. Book value is an accounting amount, not a guarantee of collection or liquidation value. A large overdue receivable may distort liquidity even if total current assets look strong.
An audit provides reasonable assurance about material misstatement in the financial statements; it does not guarantee repayment or future results. Read the opinion, scope, date, and notes. Limited-assurance reviews and compilations are different services. Regardless of assurance level, use current information and resolve material credit questions. Keep both reported results and clearly supported normalized results visible.
Worked example
Reported operating earnings include a $70,000 gain on a nonrecurring asset sale. Remove the gain when evaluating recurring earnings. Do not treat the sale proceeds as both recurring operating cash and a separate recovery source.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
2.3.1. Which item is most defensible to remove from recurring earnings?
2.3.2. Which evidence best tests collection of an old receivable?
Answer and explanation for 2.3.1
C. The gain does not represent recurring operating performance. Routine operating expenses remain.
Answer and explanation for 2.3.2
D. Collection evidence and disputes directly address realizability; unrelated information does not.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
Guided workshop
Use the Maple Industrial Supply financial information below for this module.
Use the Maple Industrial Supply workshop case and the information relevant to this module.
Spread two years and matching interim periods for a fictional business. Reconcile the balance sheet and debt schedule. List three information-quality issues and show reported and adjusted recurring earnings separately.
Module 2 skills assessment
10 questions · 30 minutes · 10 points each · Pass at 8 of 10 or 80%
Use only the formula reference and calculator. Select one best answer. Formal results require controlled administration by the instructor.
Learner __________________ Date __________ Correct ____ / 10 Score ____ % Assessor __________________
Module 3 · 4 hours
Ratios and the operating cycle
3.1 Liquidity and working capital
Learning objective Calculate liquidity measures and explain what they omit.
Working capital equals current assets minus current liabilities. The current ratio equals current assets divided by current liabilities. For this course, the quick ratio equals unrestricted cash plus short-term marketable securities plus net receivables, divided by current liabilities. Inventory and prepaid expenses are excluded from this quick-ratio numerator. Use consistent definitions and identify restricted balances.
A ratio above 1.00x means reported current assets exceed reported current liabilities. It does not prove bills can be paid on time. Assets may be slow to collect, seasonal, pledged, obsolete, or unavailable to the borrower. Review aging and a cash forecast alongside the ratio.
Analyze why a ratio changes. Collecting a receivable moves value from receivables to cash without changing total current assets. Purchasing inventory for cash also leaves current assets unchanged but changes their liquidity. Borrowing short-term cash increases both current assets and current liabilities; the effect on the ratio depends on its starting value. There is no universal acceptable ratio for every borrower.
Worked example
Current assets of $900,000 and current liabilities of $600,000 give $300,000 working capital and a 1.50x current ratio. If quick assets are $450,000, the quick ratio is 0.75x.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
3.1.1. Current assets are $800,000 and current liabilities $500,000. Working capital is:
3.1.2. A strong current ratio is driven by obsolete inventory. What is most appropriate?
Answer and explanation for 3.1.1
B. Working capital is a dollar amount: $800,000 minus $500,000. The current ratio is 1.60x.
Answer and explanation for 3.1.2
C. The composition and collectibility of current assets determine their usefulness for paying obligations.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
3.2 Profitability and leverage
Learning objective Calculate profitability and debt measures using explicit definitions.
Gross margin equals sales minus cost of goods sold, divided by sales. EBITDA margin equals EBITDA divided by sales. EBITDA means earnings before interest, taxes, depreciation, and amortization. It is a performance measure, not cash available for debt service. Investigate margin changes through price, volume, product mix, input costs, and operating expense behavior.
For this course, debt means interest-bearing short- and long-term debt. Debt to equity equals that debt divided by book equity. Total liabilities to equity is a different ratio and must be labeled separately. Debt to EBITDA equals interest-bearing debt divided by annual EBITDA. Interest coverage equals EBIT divided by interest expense. EBIT is earnings before interest and taxes.
High leverage leaves less capacity to absorb deterioration. Compare trends and relevant peers, but reconcile definition differences before making comparisons. Negative or near-zero equity or EBITDA can make ratios misleading or not meaningful. Report the underlying amounts and explain the weakness instead of treating a negative ratio as low risk. Also examine absolute payment obligations, liquidity, and maturities.
Worked example
Debt of $1.2 million, equity of $600,000, and EBITDA of $400,000 produce debt/equity of 2.00x and debt/EBITDA of 3.00x. Neither calculation includes principal payment timing.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
3.2.1. Debt is $900,000 and annual EBITDA $300,000. Debt to EBITDA is:
3.2.2. Debt is positive and equity is negative. How should the ratio be presented?
Answer and explanation for 3.2.1
C. Divide debt by annual EBITDA: $900,000 / $300,000 = 3.00x.
Answer and explanation for 3.2.2
D. A negative denominator does not indicate low financial risk.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
3.3 Cash conversion and growth
Learning objective Estimate the operating cash cycle and its financing effect.
Use 365 days and annual activity in this course. Days sales outstanding, or DSO, equals average net receivables divided by annual credit sales times 365. Days inventory outstanding, or DIO, equals average inventory divided by annual cost of goods sold times 365. Days payable outstanding, or DPO, ideally uses annual credit purchases; when purchases are unavailable, this course uses cost of goods sold as an explicitly identified proxy.
The cash conversion cycle equals DSO plus DIO minus DPO. It estimates how long cash is tied up between paying suppliers and collecting customers. Use average balances, and consider monthly averages for seasonal businesses. Do not mix ending balances with average balances without disclosure.
Growth can consume cash when additional sales require more receivables and inventory before collections arrive. Longer DSO may signal collection trouble, changed terms, or sales timing; investigate the cause. Higher DPO may reflect negotiated terms or overdue suppliers. A shorter cycle can help liquidity, but starving inventory or delaying suppliers may damage operations.
Worked example
DSO of 45 days, DIO of 60, and DPO of 30 give a 75-day cycle. If DSO rises 10 days and annual credit sales are $3.65 million, roughly $100,000 more cash is tied up, assuming steady daily sales.
Practice before moving on
Choose an answer first. Open each explanation only after committing to your choice.
3.3.1. DSO is 40, DIO 50, and DPO 25. The cycle is:
3.3.2. Sales grow but cash falls as receivables expand. What is a plausible explanation?
Answer and explanation for 3.3.1
B. 40 + 50 - 25 = 65 days; supplier credit offsets part of the operating funding need.
Answer and explanation for 3.3.2
A. A profitable sale can require financing until collection. The other conclusions do not follow.
Progress check: explain both answers correctly, including the misconception behind your original choice, before continuing.
Guided workshop
Use the Maple Industrial Supply financial information below for this module.
Use the Maple Industrial Supply workshop case and the information relevant to this module.
Calculate current ratio, quick ratio, gross margin, debt/EBITDA, and the cash conversion cycle for two periods. For each adverse movement, write one possible cause and one evidence request. Explain why profitable growth can increase borrowing.
Module 3 skills assessment
10 questions · 30 minutes · 10 points each · Pass at 8 of 10 or 80%
Use only the formula reference and calculator. Select one best answer. Formal results require controlled administration by the instructor.
Learner __________________ Date __________ Correct ____ / 10 Score ____ % Assessor __________________
Shared workshop case
Use Maple Industrial Supply for the guided workshops in Modules 1 through 3. It is a fictional wholesaler with a seasonal inventory peak, one customer representing 30% of sales, and a sole supplier for a critical product line. A possible alternate supplier has not been qualified. The seasonal peak should reverse after customer collections, but the revolver has never fallen below $300,000 during the past year. The company seeks $200,000 for a $250,000 machine with a seven-year useful life and proposes $50,000 from the owner, not yet verified.
Amounts below are in $000. All sales are credit sales. Statements are management-prepared. Annual reported EBITDA includes a current-year $20,000 nonrecurring gain on sale of a nonoperating investment; the gain and cash proceeds are both $20,000, and the investment had zero carrying value. No fixed assets were sold. Retain reported results and separately show normalized current EBITDA. The introductory management letter reports debt of $850,000; the detailed debt schedule and balance sheet both show $900,000. Ask for reconciliation rather than silently discarding the discrepancy.
| Annual income information | Prior | Current |
|---|---|---|
| Sales | 3650 | 4380 |
| Cost of goods sold | 2555 | 3066 |
| Cash operating expenses | 730 | 896 |
| Nonrecurring investment-sale gain | 0 | 20 |
| Reported EBITDA | 365 | 438 |
| Depreciation | 80 | 90 |
| Interest | 50 | 55 |
| Tax expense and cash taxes | 47 | 58.6 |
| Net income | 188 | 234.4 |
| Year end balances | Prior | Current |
|---|---|---|
| Cash | 100 | 120 |
| Net receivables | 400 | 600 |
| Inventory | 350 | 500 |
| Prepaid expenses | 50 | 30 |
| Net fixed assets | 850 | 900 |
| Total assets | 1750 | 2150 |
| Trade payables | 250 | 350 |
| Current debt | 100 | 100 |
| Other current liabilities | 150 | 155.6 |
| Long-term debt | 650 | 800 |
| Equity | 600 | 744.4 |
Current distributions were $90,000, capital expenditure $140,000, and net debt increased $150,000. For operating-cycle calculations, the opening balances before the prior year were receivables $300,000, inventory $300,000, and trade payables $200,000. Use average balances and the stated COGS proxy for DPO. Matching first-six-month sales were $1,900,000 prior and $2,100,000 current, with EBITDA of $190,000 and $170,000 respectively and no unusual items in either interim period. Do not annualize the seasonal interim figures mechanically.
Free module formula reference
| Measure | Course definition |
|---|---|
| Working capital | Current assets − current liabilities |
| Current ratio | Current assets / current liabilities |
| Quick ratio | (Unrestricted cash + short-term marketable securities + net receivables) / current liabilities |
| Gross margin | (Sales − cost of goods sold) / sales |
| EBITDA margin | EBITDA / sales |
| Debt to equity | Interest-bearing debt / book equity |
| Debt to EBITDA | Interest-bearing debt / annual EBITDA |
| Interest coverage | EBIT / cash interest expense in the simplified cases |
| DSO | Average net receivables / annual credit sales × 365 |
| DIO | Average inventory / annual cost of goods sold × 365 |
| DPO | Average trade payables / annual cost of goods sold × 365 in these exercises; COGS is a purchases proxy |
| Cash conversion cycle | DSO + DIO − DPO |
Use annual activity and 365 days for operating-cycle calculations. Round final ratios to two decimals and days to one decimal. The course uses interest-bearing debt for leverage and cost of goods sold as a purchases proxy for DPO. Ratios must be interpreted alongside asset quality, cash timing, and business risk.
Free module self-check record
This record covers the free modules only. Repeating the same questions is practice, not an unseen reassessment.