Hi, how would you structure this, and what do you think of this structure? Situation / question: Client is hit from external effect, is bleeding cash, needs cash short-term, and also thinks that not all of his businesses are profitable anymore. How to turn the situation around (short- and mid-term)? Possible structure: Short-term: Liquidity / cash management Investigate situation / objective Info sources: BS, IS, CFS Important KPIs: cash ratio, quick ratio, current ratio; Fin. CF, Op. CF, Inv. CF How long to survive? How much additional CF is needed? Generate cash (also structure regarding CFs possible, i.e. Fin. CF, Op. CF, Inv. CF) Supplier, e.g. stop to pay Customer, e.g. factoring Employees, e.g. layoff FIxed / current assets, e.g. de-invest ... Mid-term: Turnaround / restructuring Investigate situation: analyze market, analyze strengths and weaknesses of company (value creators, value destroyers) Restructure Invest in value creators, de-invest in value destroyers Restructure core-competencies and processes Restructure organization and culture Improve further: profit opportunities (revenue opportunities, cost opportunities) Plan and implement

Hi there, This is a fantastic framework. Well laid out. However, I would add a few things, particularly in the short term fixes segment: Restructure debt (longer-term debt and/or lower interest rates) Issue debt/equity (improve cashflow)...especially w/ current interest rate landscape Reduce accounts receivable Increase accounts payable Overall, well done!

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Anonymous A

on Dec 03, 2020

Global

How to structure liquidity / turnaround case?

Hi, how would you structure this, and what do you think of this structure?

Situation / question: Client is hit from external effect, is bleeding cash, needs cash short-term, and also thinks that not all of his businesses are profitable anymore. How to turn the situation around (short- and mid-term)?

Possible structure:

Short-term: Liquidity / cash management

Investigate situation / objective
- Info sources: BS, IS, CFS
- Important KPIs: cash ratio, quick ratio, current ratio; Fin. CF, Op. CF, Inv. CF
- How long to survive? How much additional CF is needed?
Generate cash (also structure regarding CFs possible, i.e. Fin. CF, Op. CF, Inv. CF)
- Supplier, e.g. stop to pay
- Customer, e.g. factoring
- Employees, e.g. layoff
- FIxed / current assets, e.g. de-invest
- ...

Mid-term: Turnaround / restructuring

Investigate situation: analyze market, analyze strengths and weaknesses of company (value creators, value destroyers)
Restructure
- Invest in value creators, de-invest in value destroyers
- Restructure core-competencies and processes
- Restructure organization and culture
Improve further: profit opportunities (revenue opportunities, cost opportunities)
Plan and implement

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