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Cashflow Analysis: Quit Looking for the List

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A lender getting ready to take my free Online Bank Training Mini-course on Green Legos, Six Ns and a Map to Tax Returns told me just what she is looking for:

“Linda, I just want the list. What can I add back to make it easier to qualify my borrower?”

So sorry, if you think there is a list, you are wrong. Well, I take that back. There may be a specific list that your company guidelines approve. It may include:

  • Depreciation, amortization, depletion
  • Carryovers
  • NOLs

But if you are trying to get from taxable income to recurring cashflow to pay debt, it may also include nonrecurring expenses or losses…and how do you decide if something is nonrecurring?

  • Are repairs their normal amount, or are they higher because of the flood downtown last year?
  • Are legal and professional fees about right, or are they high because they did a lot of intellectual property/trademark work last year?
  • Are bad debts the usual or did they have a major client go belly-up last year? (That is a technical term.)


You cannot tell by looking, and there is no list of add-backs that has ‘repairs’ listed on it. So if you are looking for ‘the list’, get over it.

That said, there is a list of ‘types of adjustments’ to look for. In the next six posts, I’ll cover the 6 Ns and give you a partial list of examples for each one.

  1. Nontaxed income
  2. Nondeducted expenses
  3. Noncash income or expenses
  4. New income or expenses
  5. Nonrecurring income or expenses
  6. Nondocumented income

What is on your list?



About the Author
Linda Keith CPA is an expert in credit risk readiness and credit analysis. She trains banks and credit unions throughout the United States, both in-house and in open-enrollment sessions, on Tax Return and Financial Statement Analysis. She is in the trenches with lenders, analysts and underwriters helping them say "yes" to good loans. Creator of the Tax Return Analysis Virtual Classroom at www.LendersOnlineTraining.com, she speaks at banking associations on risk management, lending and director finance topics.