Financial Endurance Test
Financial Endurance Test
Cash Flow Clarity
Are you clear about the definition of 'Net Operating Cash Flow'?:
A bit hazy!
"Cash generated by operations less cash required by operations"?
I know what it means, but I'm not sure exactly how to calculate it for my business
Profit after tax + Depreciation - Increase in Net Working Capital - Capital Expenditures
Are you able to estimate your next 3 months' Net Cash Flow?:
No, we don't track that
I could normally, but now we're in too much flux
I have a vague idea
Yes, with a good handle on this month's figure
Have you worked out the Worst Case Scenario for your business for the next 12 months?:
No- surely things will soon get back to normal?
We've worked out what may happen to revenue, provided things don't get worse
We have a Worst Case revenue scenario
We have a Worst Case scenario for revenue, profits and Net Cash Flow
Have you worked out your month on month Net Cash Flow for the next 12 months?:
You must be joking!
Not monthly, but for the current year
Yes, assuming things don't get worse
Yes, and for the Worst Case Scenario
Have you worked out how long your business can survive without external funds, in the Worst Case?:
No, it doesn't bear thinking about!
We have an estimate, but not on a monthly basis
We have monthly Net Cash Flow projections, but not Worst Case
Do you know what value of Sales you have to make each month to make a profit?:
I have a pretty good idea of what sales we need every month to break-even
Yes, I know my Fixed Costs and my Variable Costs as a % Sales, as well how to calculate my Break-Even Point
Do you know the Contribution (to Fixed Costs) of each Product Line?:
No, & we're not able to calculate that
We have a rough idea
Pretty much, but we haven't culled non-contributors
Yes, and we are discontinuing low-Contribution lines
Are you talking to your suppliers about reducing their prices?:
No, but we're thinking about it
We will when the contracts expire
Yes, leaving no stone unturned!
Are you looking at each of your expenses to see where you can make savings?:
No, we reckon things will return to normal
To some extent
We have made a series of cuts
Yes, we regularly scrutinise all expenses and cut whatever will not damage residual sales
Can you outsource any of your Fixed Costs?:
No (Why should we)?
We're thinking about that
Yes, a bit
Absolutely- as another way to lower our Fixed Costs
Can you chase in amounts due and stretch out payments to suppliers?:
No, or I wouldn't feel comfortable doing that
Maybe, if we really have to
We're doing that to some extent
We've done that systematically and are ready to push much harder!
Are there any business assets you could sell and/or any personal assets which could help the business?:
No - hope it doesn't come to that!
I've given it some thought, but let's wait & see
Yes, but we haven't taken action yet nor explored 2nd mortgages
Yes, and we have an asset sale program underway
Do you know how much more the business can borrow under its existing arrangements?:
If we go over our overdraft limit, the bank just charges extra interest
Not sure, but we try to stay under our overdraft limit
I have a vague idea, and we monitor it monthly
Yes, we monitor headroom under all our facilities daily
Have you explored all possible funding avenues for the business?:
No, we haven't even explored the Government schemes
We understand all the national and local Government grants and loans available to us
We understand all the Government support available and have talked to our existing lenders
Yes, including Government support, further support from existing lenders and from potential new lenders
Do you know what additional borrowing could be available to you (and to fellow Directors) personally?:
No, and I won't go there!
Not really-hope it doesn't come to that!
I/we are considering 2nd mortgages
Yes, based on discussions we've had with finance brokers