Setting Non-Financial Internal Triggers
TOOL G3 This tool will help you create internal early warning signals on your client’s key business drivers to be
Covenant Breach
TOOL L8 Certainty of breach? Information Source – Own research / agent bank / client / other? Breach History –
Client/Facility Monitoring Plan
TOOL G4 This tool provides a framework for identifying and setting appropriate internal triggers when designing a dynamic monitoring plan
Cash Flow Covenants Protection and Drawbacks
TOOL L7 Key Questions / Considerations Protection Reason Business Risk Any deterioration in the business risk (4M’s) will be reflected
The Component Parts of a Debt Service Coverage Ratio/Covenant
TOOL L6 Cash Available for Debt Service EBIT EBITDA (see Note 3) (adjust for Minority Interests) EBITDAL (see Note 4)
Definition of Terms Balance Sheet and Income Statement Covenants
TOOL L5 Key Questions Balance Sheet – (Tangible) Net Worth The principle here is to include only items that will
Non-Financial Early Warning Signals (EWS)
TOOL G5 An EWS is any factor which becomes a significant high-risk indication since the last credit assessment. This tool
Balance Sheet and Income Statement Covenants: Protection and Drawbacks
TOOL L4 Key Questions / Considerations Covenant Protection Drawbacks Minimum (Tangible) Net Worth – Trading / extraordinary losses– Write down
Financial Covenants Grid
TOOL L3 The attached table is intended as a general guideline when you are setting financial covenants to mitigate risk.
Structured Approach to Risk Analysis
TOOL H1 This tool will help you to analyse the key risks in a structured manner. • Group / family relationship
