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New Liquidity Stress Test Helps Manufacturers Assess Working Capital Needs

Complimentary Tool Assists Manufacturers in Preparing for Anticipated Economic Upturn

SOUTHFIELD, Michigan — Plante & Moran, PLLC, one of the nation’s largest accounting and business advisory firms, has launched a liquidity stress test designed to help companies understand their cash requirements so they can more effectively manage cash flow during the downturn and plan for profitability when the economy turns around. The complimentary liquidity stress test can be downloaded at http://stresstest.plantemoran.com

“With the current recession, the focus of most manufacturers has been on survival. The good news is those who have survived have an opportunity to increase profitably during the next economic upturn,” said Tim Weed, leader of Plante & Moran’s restructuring practice. “In order to seize this opportunity, manufacturers need to ensure they maintain adequate working capital and liquidity to fund inventories and receivables when increased production schedules are issued to meet rising customer and market demands.”

Plante & Moran’s Liquidity Stress Test gathers and interprets a variety of data related to an organization’s revenue and costs. It then forecasts the organization’s growing cash needs which enables the company to take action to improve its cash position.  The Liquidity Stress Test helps companies project a variety of metrics, including:

  • Monthly cash disbursements
  • Monthly cash flow
  • Line of credit requirements
  • Calculated collateral for line of credit
  • Monthly cash plus availability
  • Projected cash cushion

“For many companies, the forecasted increase in product demand will be every bit as challenging to manage as the scale down period they experienced during the winter and spring of 2009,” added Weed. “By determining strategies to increase cash flow now, manufacturers will be positioning themselves to thrive through the next upturn.”

Plante & Moran is among the nation’s largest certified public accounting and business advisory firms, providing clients with tax, audit, risk management, financial, technology, business consulting, and wealth management services. Plante & Moran has a staff of more than 1,500 professionals in 21 offices throughout Michigan, Ohio, Illinois, and in Monterrey, Mexico; Mumbai, India; and Shanghai, China. Plante & Moran has been recognized by a number of organizations, including Fortune magazine, as one of the country’s best places to work.

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