Saw an interesting cashflow model
I'm a junior credit analyst at a corporate bank and today I received an interesting cashflow model from sales team that I'd love to share and hear your thoughts.
Base case assumptions
Revenue growth = 0%
GPM = 20%
Inventory Days = 800 days
Stress case assumptions
Revenue growth = -10%
GPM = 15%
Inventory Days = 1000 days
Intuitively, it looks like the assumptions are okay. Ignoring 1st year shock, it turns out the drop in revenue causes drop in COGS, hence inventory decreases by 10% every year. The decrease in inventory pushes up operating cashflow and the company's operating cashflow and net gearing becomes better in stress case than base case. Could someone tell me what goes wrong and how to modify the model.
*AR and AP are small compared to inventory
**Debt level are assumed to stay relatively stable
Will look it when I have time but in the meanwhile BUMP!
What's the calculation for Inventory cells?
(Inventory Days * COGS) / 365
Sit quas animi maiores enim ex. Laudantium qui ut expedita minima deleniti repellendus. Ea tempore perferendis porro rerum in hic quasi. Autem aliquid quos ut totam est facere.
Eum maxime omnis eveniet id vel sit expedita. Perferendis ut natus culpa beatae amet commodi nesciunt. Molestiae dolores cum velit. Magni tenetur omnis quo non. Impedit rem quia qui vitae error incidunt. Officia delectus et a ex et odio laboriosam ipsum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...