Financial Modeling for Credit Risk Analysis

EDUCBA via Coursera

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Provider

Coursera
Pricing

Paid Course
Languages

English
Certificate

Certificate Available
Effort

12 hours
Sessions

Self-Paced
Level

Intermediate
Subtitles

English

Found in

Part of

Credit Analysis and Risk Modeling

Overview

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Learn how financial institutions analyze credit risk using structured models, financial data, and rating frameworks. Build practical skills in credit research and financial modeling used in banking and risk management roles. This course provides a step-by-step approach to credit risk analysis. You will learn how credit analysts evaluate borrowers using financial statements, ratio analysis, and structured credit rating frameworks. You will explore widely used credit risk models such as the Altman Z-Score and KMV model to understand how default probability and financial distress are measured. These tools will help you evaluate risk using quantitative methods applied in real-world finance. The course also develops your financial modeling skills by teaching how to forecast expenses, link financial statements, and analyze working capital. You will learn how income statements, balance sheets, and cash flows interact within a financial model to support credit decisions. In addition, you will analyze equity and debt structures, understand interest and repayment schedules, and evaluate how financing decisions impact credit risk. By the end of the course, you will be able to confidently analyze credit risk, interpret financial models, and apply structured credit evaluation techniques used by banks and financial analysts.

Syllabus

Foundations of Credit Research

This module introduces the core concepts of credit research and explains the structured process used to assess borrower creditworthiness. Learners explore the role of credit rating agencies, understand different types of credit ratings, and examine both the advantages and limitations of rating systems. The module also highlights the regulatory framework governing credit rating agencies and how these organizations support financial markets by providing independent risk assessments. By the end of the module, learners will understand the importance of credit research in lending decisions and investment analysis.

Credit Rating Framework and Risk Models

This module focuses on credit risk assessment models used in financial analysis. Learners examine regulatory guidelines for credit rating agencies and explore quantitative credit risk models such as the KMV model and the Altman Z-Score model. The module explains how these models estimate default probability and financial distress risk using financial indicators and market-based inputs. Learners also understand how banks apply credit assessment methods when evaluating borrowers. By completing this module, learners gain the analytical foundation needed to interpret credit risk models and apply them in real-world credit evaluations.

Financial Modeling Foundations

This module introduces financial modeling concepts used in credit analysis and risk evaluation. Learners explore how financial models forecast company performance and support credit decision-making. The module covers cost sheet preparation, ratio analysis, and the development of financial assumptions for forecasting. It also explains how analysts estimate future assets, liabilities, and capital expenditures to evaluate a company's financial outlook. Through these topics, learners develop a foundational understanding of financial modeling techniques used by analysts in credit research and corporate finance.

Expense Forecasting and Statement Linkages

This module focuses on expense forecasting and the integration of financial statements within financial models. Learners examine the calculation of intangible assets, total expenses, and working capital components. The module explains how depreciation, amortization, and working capital linkages affect financial statements. Learners also explore how cash flow statements connect with income statements and balance sheets within a financial model. By understanding these linkages, learners develop the ability to build consistent and integrated financial models used in credit research and financial forecasting.

Equity and Debt Modeling

This module explores the structure of equity and debt within financial models. Learners examine how equity components, retained earnings, and dividend distributions are calculated and incorporated into financial statements. The module also explains short-term debt management, revolving credit facilities, and liquidity considerations in financial modeling. Learners study how interest expenses and debt schedules are integrated into balance sheets and financial forecasts. By the end of the module, learners understand how analysts evaluate financing decisions and incorporate equity and debt components into credit analysis models.

Credit Rating Analysis and Models

This module applies the concepts of credit research and financial modeling to practical credit rating analysis. Learners explore rating analysis techniques, market trend evaluation, and credit rating models used by financial institutions. The module explains how banks assess borrower creditworthiness using financial indicators, market conditions, and quantitative models such as the Altman Z-Score. By completing this module, learners gain practical insights into how credit analysts and financial institutions evaluate risk and assign credit ratings in real-world financial environments.