Creditors use a program called Famas to monitor the financial performance of existing borrowers and to assess the financial accounts of potential borrowers. It was once manufactured by a business known as "Crowe Chizek," but Moody's bought either the whole business or the product line.
When I used this program in the late 1990s, it was excellent; in fact, it could do almost all that the current product, Moody's Financial Analyst, could accomplish. This new product is now the norm at most small and medium-sized banks. While it is not as widely recognized, many banks also utilize another software called Winfast. Naturally, Moody's was able to stop it by purchasing Famas and start selling their own product in its place.
How do these packages function now?
The way these packages function is by letting you "spread" the financial accounts. To assess the borrower's financial performance, state, and capacity to repay, it gives financial data spanning many years. But it's difficult to tell all those things by just glancing at the finances. To start with, you'll need a big desk so you can see all of the data. Secondly, you would have to do the calculations for each ratio that you want. In order to identify a pattern, you need finally examine many ratios, but also consider how that ratio stacks up against previous years.
You can do it with FAMAS and every other comparable apps. The program requires the financial data from the income statement and balance sheet to function. Because every account must be entered in the proper location, or more precisely, "in the correct flow," this is done with extreme care. Following this, the program will provide a variety of reports and ratio calculations. The financial analyst at Moody's will allow you to generate about thirty reports. I personally like to publish only five, which are:
1. The balance sheet's actual and percentage representation informs me of changes in the asset and financing mix in tandem with changes in net worth.
2. Actual and percentage income statement = same as previously, but I focus on changes in the cost structure, i.e., costs
3. Detailed reconciliations provide insight into the causes and mechanisms behind equity and working capital adjustments.
4-UCA cash flow is a measurement of the actual inflows and outflows of funds inside the business.
5. Detailed ratios: ratios of activity, leverage, profitability, and liquidity.
Newer versions of these software packages have an integrated database of industry averages from RMA (previously known as "Robert Morris"). This firm compiles industry statistics, allowing you to compare the borrower to the sector. It is a good idea to do this comparison for all loans since it is regarded as a minimal credit criteria for certain government-insured loans.
I believe I've rambled on long enough, and since I have to return to work after lunch, I'd want you to search for "Moody's Financial Analyst" on Google to see whether any examples of these statements are accessible. Since FAMAS is a discontinued product that may still be in use on a few banks but won't be in a few years, I doubt you will gain information about it.
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