Given the economy, most businesses have spent the past year focused on survival. Many companies survived the brutal declines in revenue through aggressive cost cutting and by generating cash via reducing receivables and inventory and/or stretching payables.
Unfortunately, companies weakened by the recession are at risk of failure just as their sales increase and they return to profitability. Rapidly increasing sales from the low level many companies saw in May-July will require cash to fund the increases in receivables and inventory, not to mention long deferred maintenance and capital investment.
How do you know where your organization stands? Enter Plante & Moran Liquidity Stress Test.
Understanding your liquidity needs
The Plante & Moran Liquidity Stress Test is a tool to help companies forecast their cash flow needs. The tool can be an effective planning aid to determine how much cash you will need and when you will need it!
To receive a link to the model, visit Plante & Moran Liquidity Stress Test to agree to the software use terms.
Who Needs It?
Manufacturers and distributors will benefit most from taking this test, as they typically have to increase inventory to support higher volume. Auto suppliers may also have the added costs of new programs. Any organization which, in an upturn, will initially consume more cash than it collects should one way or another be forecasting cash.
What Do You Do With the Results?
If you have plenty of liquidity to fund your increasing working capital needs, that’s great news. If, however, you forecast a cash shortfall, your company needs to make the necessary changes to ensure you do not run out of cash. Our consultants can meet with you to provide a more detailed and accurate cash forecast, develop a business and financing plan to avoid a cash shortfall, and assist with negotiations involving lenders or other third parties. For more information, please contact David Priestley at 248.223.3405.
Assistance after the download
A very small number of users may have issues after downloading the file. These issues could arise from compatibility issues or macro security.
This model was designed for use in Excel 2003 and 2007 and may not be compatible with older versions of Excel.
This tool requires that macros are enabled. Depending on your Excel security settings, you may have to enable macros when opening the file.
If you open the file and an ‘Enable Macros’ dialog box appears, click on the “Enable Macros” button. Doing so will allow all functionality to be used within this model.
If you do not receive the ‘Enable Macros’ dialog box, your security settings may already allow macro functionality. You can proceed to complete the form to forecast your cash flow needs. Additional information can be found within the file should you encounter any macro issues.