Buy Side & Sell Side Diligence
Centralized treasury functions to more efficiently and accurately monitor cash positions.
Cash flow forecast sensitivity analysis for growth, with limited historical financial data.
- Industry | Food & Beverage, Fish & Seafood Wholesaling
- Engagement | Cash and control analysis, including review 26-week cash flow analysis and P&L forecast related to potential financing arrangement
Client
An SEC-registered investment advisor providing equity and debt financing to established and emerging companies from a diverse array of industry sectors.
Target
Sources, produces, and sells value-added seafood products.
Situation
At the time of review, Target was in the growth stage of its business and transitioning its product offerings and operating structure; therefore, historical financial results were not indicative of future performance.
Target projected significant revenue growth due to new product launches, which had limited historical financial data.
Solution
Performed a sensitivity analysis of Target’s projected financial performance to determine the impact of missing forecasted figures and assess its ability to generate positive cash flows. RedRidge applied stress rates to the projected sales volumes of each business unit, assuming a consistent price and product mix per product line.
As a result, RedRidge determined that a 10% miss in volume growth would delay positive annual EBITDA until year three of the forecast.
Through review of financial processes and controls across the organization, RedRidge recommended the Company centralize the treasury function at the corporate office in order for Management to more efficiently and accurately monitor the Company’s cash position.