01 / Learn the method
Learning outcomes
Stress customer timing and FX while respecting funding limits. Calculate the result, reconcile it and communicate its limitations.
Method
Liquidity headroom is usable cash plus available funding less the required buffer. A facility limit is not unrestricted cash: apply eligibility and draw constraints. Stress correlated drivers together when the scenario calls for it, and keep delayed receipts in a later period or explicitly outside the horizon.
Smaller worked example
Cash 10 plus undrawn eligible funding 5 less a required buffer 8 leaves headroom 7. A nominal credit line of 20 does not create headroom 22 if only 5 is available to draw.
02 / Put it to work
Business context and rules
Fictional Larch Imports, three monthly periods October-December 2026, USD thousands except FX. Opening cash 30. Base receipts 50 / 60 / 70; domestic payments 40 monthly; euro supplier payments EUR 20 thousand monthly. Base USD/EUR 1.10, stress 1.25. Stress delays 20 of October receipts to November. Committed facility total 25, already drawn 10 at start, with maximum additional draw 10 per month; no repayment or interest within this simplified horizon. Existing debt is already reflected in opening cash. Required cash buffer 10. Model combined stress, draw only what is needed to approach buffer subject to both constraints. Do not allow negative additional availability.
Original synthetic inputs
| Input | Value | Unit |
|---|---|---|
| Opening cash | 30 | USD thousands |
| October base receipts | 50 | USD thousands |
| November base receipts | 60 | USD thousands |
| December base receipts | 70 | USD thousands |
| Monthly domestic payments | 40 | USD thousands |
| Monthly EUR supplier payment | 20 | EUR thousands |
| Base USD per EUR | 1.1 | USD / EUR |
| Stress USD per EUR | 1.25 | USD / EUR |
| October receipt delayed to November | 20 | USD thousands |
| Total committed facility | 25 | USD thousands |
| Already drawn facility | 10 | USD thousands |
| Maximum new draw per month | 10 | USD thousands |
| Required buffer | 10 | USD thousands |
Required deliverables
Prepare base and combined-stress monthly cash, constrained funding and residual buffer shortfall. Recommend escalation triggers and state what additional lender / FX evidence is needed. Do not assume the model can draw past the agreement.
Use formulas for derived amounts and preserve source data. Put narrative deliverables in the workbook response area; expand it as needed. Compare amounts within 0.01 of the stated unit and percentages within 0.1 percentage point. No unsupported balancing plugs.
03 / Review your work
Try the assignment before opening the answer.
Open the worked answer and teaching notes
Worked numerical schedule
| Measure | Value | Unit |
|---|---|---|
| Base October cash before new funding | 18.00 | USD thousands |
| Base November cash before new funding | 16.00 | USD thousands |
| Base December cash before new funding | 24.00 | USD thousands |
| Stress October pre-funding cash | -5.00 | USD thousands |
| October constrained additional draw | 10.00 | USD thousands |
| Stress October post-funding cash | 5.00 | USD thousands |
| Stress November pre-funding cash | 20.00 | USD thousands |
| November constrained additional draw | 0.00 | USD thousands |
| Stress November post-funding cash | 20.00 | USD thousands |
| Stress December pre-funding cash | 25.00 | USD thousands |
| December constrained additional draw | 0.00 | USD thousands |
| Stress December post-funding cash | 25.00 | USD thousands |
| Minimum post-funding buffer headroom | -5.00 | USD thousands |
| Remaining facility after period 3 | 5.00 | USD thousands |
| Stress cash roll-forward residual | 0.00 | USD thousands |
Interpretation and recommended actions
Base cash closes 18 / 16 / 24. Under combined stress October pre-funding cash is -5; the monthly draw cap permits 10, leaving cash 5 and a 5-unit buffer shortfall. November cash recovers to 20, December to 25, with 5 facility availability left. The facility limit alone would permit enough October funding, but the monthly draw cap does not. Escalate before October payments; confirm any cap amendment, receipt acceleration or approved payment change. A December surplus does not solve October timing.
Scoring rubric - 100 points
| Dimension | Points | Awarding guidance |
|---|---|---|
| Calculation | 40 | Base cash 8; combined stress 12; funding constraints 12; shortfall and reconciliation 8. |
| Interpretation | 25 | Correct application of the case rules 10; explain the business decision 10; identify evidence or limitations 5. |
| Controls / audit trail | 20 | Traceable formulas 8; independent reconciliation 8; explicit units and signs 4. |
| Communication | 15 | Decision and numerical headline 5; actions with owners and evidence 5; concise response covering all required deliverables 5. |
Award method credit after an isolated arithmetic error rather than repeatedly deducting for it. Equivalent account labels and well-supported alternative recommendations are acceptable. Numerical tolerance is 0.01 in the stated units; no universal passing score is prescribed.
Common mistakes
Adding the full facility limit to cash; forgetting existing drawings; allowing November collections to fund October; ignoring draw caps.
Staged hints
Convert EUR payments before the cash schedule. Calculate cash before funding, constrained draw, then cash after funding. Keep remaining availability nonnegative.
Instructor notes
Prerequisites: CFT-02 and scenarios. Suggested use of the estimated 90 minutes: spend roughly 15% on the lesson and smaller example, 55% on the independent task, 20% on comparing approaches and 10% on the decision discussion. Timing is untested. Ask learners to explain why the numerical check is necessary but not sufficient.
For a simpler class, provide the model structure and work through one driver. For an extension, change one operational assumption and require a new reconciliation and recommendation. Verify the new key before distributing any variant. Open files in the intended spreadsheet application before class. Solutions are learning resources, not secure hiring examinations. Expert review remains pending.
Continue this learning path
CFT-01 · Turn Receivables into a Cash Collection Plan
CFT-02 · Build a 13-Week Cash Forecast
AI-assisted synthetic teaching case. Expert review and native Excel / Sheets testing pending.