Accounting firm Plante & Moran has introduced a Liquidity Stress Test tool that manufacturing businesses can use to assess their working capital needs.
The tool is designed to help manufacturers to manage their cash flow requirements more effectively during the economic downturn and plan for profitability for the eventual upturn.
With the current recession, the focus of most manufacturers has been on survival, said Tim Weed, leader of Plante & Morans restructuring practice, in a statement. The good news is those who have survived have an opportunity to increase profitably during the next economic upturn. In order to seize this opportunity, manufacturers need to ensure they maintain adequate working capital and liquidity to fund inventories and receivables when increased production schedules are issued to meet rising customer and market demands.
Plante & Morans Liquidity Stress Test gathers and interprets a variety of data related to an organizations revenue and costs. It then forecasts the organizations growing cash needs, enabling the company to take action to improve its cash position. The tool works within Microsoft Excel to help companies project a variety of metrics, including monthly cash disbursements, monthly cash flow, line-of-credit requirements, calculated collateral for line of credit, monthly cash plus availability, and projected cash cushion.
The complimentary liquidity stress test can be downloaded at www.stresstest.plantemoran.com.
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