Tag

liquidity

4 insights

Three columns of cash available to a commercial printer. A sale-leaseback of owned presses raises $2.70 million, an equipment-secured refinance raises $2.16 million, and a loan sized on last year's earnings raises $600,000, against equipment appraised at $3.6 million.

The Presses Are Paid Off. The Business Is Short of Cash.

A commercial printer owns $3.6 million of appraised equipment and can borrow $600,000 on last year's earnings. A sale-leaseback on the same presses raises $2.7 million, at $69,800 a month and $650,000 of total cost.
Financing StrategyBorrower Advisory
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A two-point comparison of what it costs to raise $6.1 million against a $30 million family manufacturer. Selling a 31 percent stake under a deadline gives up $9.38 million of business value. Financing the same amount over five years costs $1.68 million of interest.

The Estate Tax Is Due in Nine Months. The Estate Is the Business.

A family owes $7.6 million of estate tax nine months after the founder's death, with $1.5 million of cash and a $30 million manufacturer. Selling a stake under the deadline gives up $9.4 million of value. Financing costs $1.68 million.
Financing StrategyBorrower Advisory
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Twelve monthly columns of working capital tied up at a $24 million holiday goods distributor. Months January to July sit below the $6.8 million covered by the owner's cash and a line sized on the average month. August to December rise above it, peaking at $9.74 million at the end of October, $2.94 million short.

The Best Quarter Starts With the Emptiest Bank Account

A $24 million holiday goods distributor ties up $9.74 million in receivables and inventory at the end of October, against $6.8 million on an average month. A credit line sized on the average runs out in August and is $2.94 million short at the peak.
Financing StrategyBorrower Advisory
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Two horizontal bars comparing the annualized value of a 2/10 net 30 early payment discount at 37.2 percent against the roughly 9 percent all-in cost of a working capital line used to fund it, a spread of 28.2 points.

Your Cheapest Capital Is a Discount You Cannot Afford to Take.

Customers moved from net 30 to net 60, which tied up an extra $1.08 million. The consequence shows up on the other side of the business, where $162,000 of supplier discounts go unclaimed every year because the cash is not there.
Financing StrategyBorrower Advisory
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