All cases
Review a fast-growing distributor’s loan request
Read a borrower’s financial statements · Fictional case
The situation
A distributor earns ₹14 crore operating cash before working capital. Receivables absorb ₹8 crore, stock absorbs ₹5 crore, and payables release ₹3 crore. Scheduled debt service is ₹6 crore.
Your task
Does operating cash alone cover annual debt service?
Reveal step-by-step solution
Set up the problem
Working capital absorbs ₹8 + ₹5 − ₹3 = ₹10 crore.
Work through the numbers
Operating cash after the build is ₹14 − ₹10 = ₹4 crore. Simplified coverage is ₹4 ÷ ₹6 ≈ 0.67× before other adjustments.
Interpret the result
The modeled funding gap is ₹2 crore. Request ageing, customer concentration, cash forecasts and committed liquidity.
What to remember
Start from cash available for repayment and compare it with the payment schedule.