Deloitte CRG - Turnaround
Deloitte CRG Cash Flow Management:
A balancing act of technical know-how and finesse
Deloitte Transactions and Business Analytics LLP May 22, 2014
Disclaimer
This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this presentation."
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Copyright ? 2014 Deloitte Development LLC. All rights reserved.
Overview of The 13-week Cash Flow
? What is it? A tactical tool to help companies understand and manage short-term liquidity
? When is a Company (typically) required to create one? During a liquidity crisis or at times of distress
? What purpose does it serve?
Provides greater visibility into potential upcoming points of liquidity difficulty, while allowing a better understanding around which to frame a restructuring
? What deliverables may be submitted to the stakeholders? 13-week cash flow forecast (summary level) Borrowing base (if applicable) Weekly forecast vs. actual (variance report)
? How does the 13-week cash flow compare to an integrated business plan model? Tactical vs. strategic view of the near term Indirect and/or direct in integrated model vs. direct method in 13-week cash flow
? Always perform analysis on a "book" basis, not a "bank" basis
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Copyright ? 2014 Deloitte Development LLC. All rights reserved.
13-week Cash Flow Forecast Example
Week Count
Total
Sales and Receipts Operating Disbursements Non-operating Disbursements
Revolver and Availability
3
Days Week Ending
0 18-Jan
7 25-Jan
Projection Period
14
21
28 .... 77
1-Feb
8-Feb 15-Feb ... 5-Apr
84 12-Apr
Total
Total Sales
Cash Receipt Operating Receipt Excess Inventory Receipt
2,000 3,500
6,500 5,000
-
2,950 ..............
500
5,000 ..............
..............
1,750
30,450
36,200 1,500
Total Receipt
3,500
5,000
500
5,000 ..............
1,750
37,700
Disbursement Vendor Payment Gross Payroll Rent and Utilities Equipment Leases Property Tax General Insurance Other
2,000 863 25 50
3,750 288 25 50
-
1,000 ..............
963
288 ..............
225
25 ..............
500
-
..............
-
-
..............
38
-
..............
50
50 ..............
2,950 863 25 50
22,530 8,063
925 1,500 4,000
375 650
Total Op. Disbursements
2,938
4,113
1,775
1,363 ..............
3,888
38,043
Net Operating Cash Flow
Non-operating Disbursement Interest Payment Capital Expenditure Professional Fee
563
888 (1,275) 3,638 ..............
(2,138)
(343)
-
-
376
-
..............
125
125
125
125 ..............
100
..............
-
1,349
125
4,500
300
Total Non-op. Disbursements
125
125
601
125 ..............
125
6,149
Net Cash Flow
438
763 (1,876) 3,513 ..............
(2,263)
(6,491)
Revolver roll-forward Beginning revolver Add: draw Minus: Paydown
Ending revolver
20,500 (438)
20,063
20,063 (763)
19,300
19,300 1,876
-
21,176
21,176 -
(3,513)
17,663
.............. .............. ..............
..............
24,729 2,263
-
26,991
20,500 18,218 (11,727)
26,991
Availability (**)
2,938
3,586
1,824
3,537 ..............
(5,308)
(*) Check outstanding is as of Jan 14, 2013
(**) Availability is the difference between revolver (after covering float) and the lower of borrowing base/facility limit of $25,000
Copyright ? 2014 Deloitte Development LLC. All rights reserved.
Borrowing Base Example
Week Count
Accounts Receivable
Inventory
Total Collateral Value
Revolver and
Availability
Days Week Ending
0 18-Jan
7 25-Jan
Projection Period
14
21
28 .... 77
1-Feb
8-Feb 15-Feb ... 5-Apr
84 12-Apr
Accounts Receivable Ending A/R Ineligible
13,500
15,000
14,500
12,450
..............
9,250
2%
(270)
(300)
(290)
(249)
..............
(185)
Eligible A/R
13,230
14,700
14,210
12,201
..............
9,065
Collateral A/R
85%
11,246
12,495
12,079
10,371
..............
7,705
Inventory Ending Inventory Ineligible
33,505
29,880
32,318
30,775
..............
37,200
5%
(670)
(598)
(646)
(616)
..............
(744)
Eligible Inventory
32,835
29,282
31,671
30,160
..............
36,456
Collateral Inv Limit at
50% $ 18,500
16,417
14,641
15,836
15,080
..............
18,228
Collateral Inv - Applied
16,417
14,641
15,836
15,080
..............
18,228
Total Collateral Value Minus: Open L/C
Total Borrowing Base
27,663 (2,250) 25,413
27,136 (2,250) 24,886
27,914 (2,250) 25,664
25,451 (2,250) 23,201
.............. .............. ..............
25,933 (2,250) 23,683
Availability Calculation Lower of Borrowing Base or Limit
25,000
24,886
25,000
23,201
..............
23,683
Ending Revolver Plus: check outstanding (float) (*)
20,063 2,000
19,300 2,000
21,176 2,000
17,663 2,000
.............. ..............
26,991 2,000
Ending Revolver (after covering float)
22,063
21,300
23,176
19,663
..............
28,991
Availability (**)
2,938
3,586
1,824
3,537
..............
(5,308)
(*) Check outstanding is as of Jan 14, 2013
(**) Availability is the difference between ending revolver (after covering float) and the lower of borrowing base or facility limit of $25,000
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Copyright ? 2014 Deloitte Development LLC. All rights reserved.
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