case study: line of credit analysis for a cfo · 1 line of credit analysis for a cfo the client the...
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New York | Miami | Hyderabad Services: Data Analytics | Web Analytics | Spreadsheet Modeling Perceptive-Analytics.com (646) 583 0001 [email protected]
Case Study: Line of Credit
Analysis for a CFO
1
Line of Credit Analysis for a CFO The Client
The client is a CFO of a midsized home electronics solutions provider.
Business Challenge
The client is the CFO of a mid-sized electronics company engaged in activities related to home video
use. With the company slated to make investments in the next financial year, the CFO needed to
prepare credit requirements for the coming year. Historically, 60% of the company’s financing
requirements were met by credit line from a bank. Realizing this, the CFO wanted to analyze the
cash flows to predict credit line requirements and renegotiate the terms for a new credit line.
Solution
Our model projects cash inflows and outflows of the company. The user, for the analysis, is given a
choice of altering the inputs and/or performing a what-if analysis to seek the key metrics for a given
condition. The user can also estimate the required return on investment or the closing balance at
the end of previous year to be able to make do with current line of credit.
Inputs
The inputs are classified into collections, payments, other variables and investments. The user can
vary key variables and instantly visualize the results in a chart.
What-if Analysis
The model allows the user to conduct “what-if” analysis to seek the credit line requirements under
different circumstances. She/he can also vary forecast by a percentage or vary performance in all
months by a user defined percentage and review the results.
Outputs
For the ease-of-use, the model dynamically portrays cash flows of the company and highlights the
minimum and maximum financing requirements.
2
Impact
The model gave our client a clearer understanding of the company’s credit line usage. With the
insights gained from the model, our client was able to predict the financing requirements and the
necessary agreements based on performance measures. Armed with this information our client
successfully negotiated a new credit line that would allow the company to make the investments as
planned. With the new credit line, the CFO attained the flexibility of making investments as and
when required without accruing interest costs.
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Perceptive Analytics
Perceptive Analytics is a Data Analytics company, offering specialized services in
Big Data Visualization, Marketing Analytics, Web Marketing Analytics, Financial
Modeling, Spreadsheet modeling and application solutions. We serve medium to
large companies in the USA, India, Australia, Europe and Middle East.
We provide financial modeling, statistical modeling, simulation, dashboard design,
what-if analysis, data analysis, spreadsheet applications and similar services.
To know more, you can reach us at [email protected].
New York | Miami | Hyderabad Services: Data Analytics | Web Analytics | Spreadsheet Modeling Perceptive-Analytics.com (646) 583 0001 [email protected]
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