Posted: September 21st, 2016

Company XYZ’s cash flow was negatively impacted by an economic recession. The company now has a shortfall of $20 million in its planned cash flow. The company had originally targeted the cash for an expansion project.

Company XYZ’s cash flow was negatively impacted by an economic recession. The company now has a shortfall of $20 million in its planned cash flow. The company had originally targeted the cash for an expansion project. If the project is halted or scaled down, the company will have insufficient capacity to produce the goods necessary to meet future sales projections. If money is borrowed to make up the cash shortfall, the debt ratio will exceed the company’s guidelines.

How could the finance department contribute to a solution for the company? What specific steps could they take?