Corporate / commercial banking and private debt roles focus on providing loans to projects and companies. In addition to analyzing the qualitative aspects of a company’s performance, analysts and associates need to create a forecast for the company in order to understand what its future cash flows may look like. Future cash flows drive many important debt metrics, and cash flows will also drive a company’s capacity to pay interest expense, make mandatory debt repayments, and meet financial covenants. Covenants are essentially restrictions on debt metrics which the company cannot exceed without being in default. Therefore, it is imperative that finance professionals in this space have a strong understanding of financial modeling.
