Companion files

Treasury Management

A Practitioner’s Guide to One Company, Five Cash Balances, and the Liquidity That Disappears the Day It Is Needed

Julian R. Sterling

These are the four Excel workbooks that go with the book. Every figure the book prints is reproduced in them by a live formula rather than a typed constant — change the days of float, the covenant, the supplier’s own funding rate or the spot in twelve months, and every dependent number moves. Each one ends with a Checks sheet setting the printed figure beside the computed one: 116 controls in all, every one green. If a control ever reads FAIL, the workbook is wrong, not the book.

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The four workbooks

• Chapters 1, 3 and 12

  Bramwell — the five balances

  Reported cash by location, and the four subtractions that take it from 214,000,000 to 205,000,000, to 152,000,000 under the facility’s definition, to 120,608,000 once six days of the company’s own payments are held back, to the 68,400,000 cleared on the concentration account this morning. The float is a cell: set it to four days or eight and watch reading 4 move by 10,464,000 each way.

  Then net debt three ways on the same 550,000,000: 2.0000x on the board’s cash, 2.3690x on the facility’s, 2.5559x on the treasurer’s, with the headroom under the covenant beside each. The cash definition alone is 0.3690 turns, and it is a formula.

  Bramwell_The_Five_Balances.xlsx · XLSX · 10 KB

• Chapters 4, 5, 6 and 7

  The liquidity test

  Twelve quarterly forecast errors and the standard deviation they produce — 4.1026 per cent of quarterly disbursements, 13,415,426.12 — then the reserve at 95, 99 and 99.9 per cent, and the minimum liquidity from its three components: 124,596,281.16, of which 93,204,281.16 sits above the float. The headroom is tested on both consistent bases, and the classic double count that says the company is 3,988,281.16 short is reproduced on the page and labelled as the error it is.

  The drawstop, solved: the EBITDA at which the covenant is exactly met on the facility’s cash, 132,666,666.67, a fall of 21.0317 per cent, and at an operating leverage of 2.5 a fall in annual revenue of 8.4127 per cent. Without the revolver the company clears its own minimum by 27,403,718.84 — 5.2377 days of payments. Then three ways to hold 250,000,000, priced — 1,562,500 undrawn, 5,625,000 as term debt on deposit, 5,000,000 drawn — the 4,062,500 premium for liquidity without a drawstop, and the cover under each way on both readings of finance charges.

  The_Liquidity_Test.xlsx · XLSX · 15 KB

• Chapters 8, 9, 10 and 11

  Working capital and the discount

  Eighty days of cash conversion cycle turned into money: a day of receivables is worth 3,835,616.44 and a day of payables 2,684,931.51, and five days off DSO releases 19,178,082.19 without a bank. The 2/10 net 60 discount annualised — 14.8980 per cent — and netted against the cost of funding fifty days on the revolver: 5,471,890.41 a year, and the 0.3132 turns of reported leverage it costs.

  The supply chain finance programme on the annual-flow basis: 66,049,315.07 released, the supplier’s saving of 5,541,698.63 against 90-day terms and its cost of 72,493.15 against the terms it actually has, and the reclassification on both readings — 2.7622x on the extension, 3.1362x on the balance the bank holds. And the eurozone pool before and after: 1,190,000 a year.

  Working_Capital_and_the_Discount.xlsx · XLSX · 13 KB

• Chapters 13 and 14

  Hedging

  The swap: interest of 26,547,500 and cover of 6.3283x today, 32,187,500 against 28,947,500 after a 200 basis point rise, the saving of 3,240,000 that nine years of carry buy — and the shortcut that says 3,600,000, reproduced and labelled. The base rate at which cover reaches 4.00x, with and without the swap: 8.27 and 15.88 per cent. The fixed share on both readings, and the net floating exposure after cash.

  The currency hedge: the forward from the two rates, 1.095728, the carry of 1,594,896.33 that is an interest differential and not a fee, three futures for the spot with the hedge gain in each — the hedge that lost 8,130,844.04 at 1.0200 and was right — the value of one cent (1,019,367.99) and ten, and the layered programme.

  Hedging.xlsx · XLSX · 11 KB

Conventions used throughout

Blue text	a hardcoded input — you may edit these
Yellow fill	an assumption that decides the answer
Black text	a formula — do not overtype these
Checks sheet	the printed figure beside the computed one, with a PASS or a FAIL

Why the checks matter more than the models

A workbook that agrees with a book proves nothing on its own — the author wrote both. What the Checks sheets do is different: they force the model to reproduce a number that was printed before the model existed, from a formula rather than from the number itself.

On this book the discipline caught three things a reading would not, and each of them changed a conclusion. The first was a double count: the six-day float had been taken out of the cash and put into the requirement at once, and the company was 3,988,281.16 short of its own minimum; counted once, it clears it by 27,403,718.84. The second was a supplier’s cost computed on one turn of the payables stock and printed as a year: the saving was 1,366,446.24 and is 5,541,698.63. The third was the swap’s saving in the shock year, 3,600,000 by comparing two “extra interest” figures from different baselines, 3,240,000 as the difference in total interest. All three wrong figures are still in the workbooks, labelled, because a reader who can see the error is a reader who will not make it.

Where a shortcut and the full computation disagree, both are shown. Interest cover under way B is 5.2627x net of deposit income and 4.3724x gross, and 4.1638x once the overdraft interest the book’s total leaves out is added; the net floating exposure after cash is -608,000, or at most 64,392,000 on home-currency cash alone. Neither gap is smoothed away.

Opening the files

The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. They use no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to update links on opening, decline — there are none.

Articles on this book

• Does an undrawn revolver count as liquidity?67.4567 per cent of the headroom, and it leaves at a fall in annual revenue of 8.4127 per cent — not the 13.3333 per cent the board deck implies.
• How much of a company's cash is actually available?One balance sheet, five correct answers, 214,000,000 down to 68,400,000 — and the definition alone is worth 0.3690 turns of leverage.
• Does supply chain finance count as debt?66,049,315 released, and leverage of 2.7622× or 3.1362× depending on which balance the test is asked of — the second is a breach at today's EBITDA.
• How do you set a minimum cash balance?Three components, 124,596,281 in total — and the double count that turns a margin of 27,403,719 into an apparent shortfall of -3,988,281.
• Is a 2/10 net 60 discount worth taking?An annualised 14.8980 per cent against a revolver at 4.50 per cent — worth 5,471,890 a year, and 0.3132 turns of reported leverage.
• Should corporate debt be fixed or floating?78.1818 per cent of gross debt fixed, and a net floating exposure after cash of -608,000.00 — the proportion, not the instrument.
• Did my currency hedge fail if it lost money?A loss of 8,130,844.04 against spot, and the hedge did exactly what it was for — the break-even is the forward, not the spot.
• Where should a company park its surplus cash?361,824.00 between the best and worst yield, and 93,204,281.16 of the surplus already spoken for.
• What should a monthly treasury report contain?Nineteen lines, each with the covenant or limit it is measured against — and 27,403,718.84 without the revolver on every one of them.
• Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.

Also by Julian R. Sterling

The other books with companion files. The full list of titles is on the author page.

• Credit AnalysisOne borrower, four defensible EBITDAs, and the add-back argument worth fifty times the covenant headroom.
• Breaking Into European Defence ProcurementThe money and the instruments, the 35 per cent content test, and proposal economics.
• Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
• CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
• How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
• How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
• How to Read a Limited Partnership AgreementWhat the clawback actually collateralises, and why every dollar won on the tax clause lands in the uncollateralised column.
• How to Read a Private Funds Financial StatementsThe Harbourgate reporting pack, five worked cases, and rebuilding your own account.
• How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
• Insurance Capital for Asset ManagersWhy the same fund costs two insurers different amounts, and what opacity costs a manager in euros.
• Logistics and Industrial Real EstateNet effective rent, the ageing asset, and the development letting decision.
• Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
• Operational Due Diligence in Private EquityThe rating model built and then broken, and why refining a rubric weakens it.
• Personal Finance for BeginnersWhat a minimum payment really does, and what the snowball and the emergency fund actually cost.
• Private Equity Investor RelationsWhat a fund has returned, read six ways — and the eleven-point gap between them.
• Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
• Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
• Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
• Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
• Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
• Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
• Real Estate Joint VenturesThe JV waterfall and promote, the complete venture, and failure to fund.
• Real Estate Transaction Due DiligenceWhat the diligence cost, which workstreams paid for themselves, and the investigation the book skips, priced.
• REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
• Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
• Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
• Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
• Senior Living and Healthcare Real EstateThe resident engine of a seventy-bed home, the payor mix, and a rota costed at the employer's real hourly rate.
• Significant Risk TransferThe bank's ceiling and the investor's floor derived independently, and the narrow band of prices at which both can say yes.
• Stock Market Investing for BeginnersWhat compounding and fees actually cost, with figures — and a calculator for your own.
• Student Housing Real EstateRevenue per available bed against the rate card, the letting campaign week by week, and the cost base of a 520-bed scheme.
• The AIFMD II HandbookThe reverse stress test computed, and the facility term that moves it more than any asset.
• The Asset-Based Finance HandbookThe borrowing base off a live loan tape, the Meridian transaction, and trigger design.
• The CBAM Compliance HandbookWhat 2027 really costs, how big the buffer should be, and the term the surrender formula counts twice.
• The Co-Investment PractitionerWhat dilution really costs, what a pay-to-play clause is worth, and how much to hold back.
• The Continuation Fund HandbookThe Thalia transaction, the bid funnel, and the fees behind the roll decision.
• The Data Center Development HandbookThe underwrite computed: the levered return the chapter never builds, and what a twelve-month slip costs.
• The Distressed Debt InvestorWhere the fulcrum security actually breaks, and what an 80-cent recovery is worth once composition and time are priced.
• The ESG Manager in Private EquityThe exit in equity and IRR, the line the book drops, and the half-turn nobody controls.
• The EU AML HandbookThe back book sized, and the month beyond which no headcount recovers a one-year window.
• The Evergreen Fund HandbookWhat the sleeve costs, and the headline IRR at which a closed-ended fund merely ties.
• The Family Office ProfessionalWhat an office costs, and the level of wealth at which building one starts to pay.
• The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
• The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
• The Infrastructure Investment AnalystDebt sculpted to a coverage floor, and one asset valued twice to the last decimal.
• The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
• The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
• The Private Equity Operating PartnerThe value creation bridge built in full, and who actually made the return.
• The Private Fund Compliance OfficerThe grey zone as basis points, a broken deal four ways, and how many items you must test.
• The Private Markets Limited PartnerWhat a co-investment programme really saves, and the loss rate that erases it.
• The Private Markets Valuation SpecialistThe book describes its illustrations without numbers on purpose. These files close the chain, with every step visible.
• The Private Wealth FundraiserThree peaks, years apart, and the signature that tells a forecast miss apart.
• The Real Estate Asset ManagerBusiness plans, leasing, and what deferring the work on a building actually costs.
• The Real Estate Debt InvestorThe margin against the return on capital, the floor priced, and what prepayment protection buys.
• The Real Estate Development ManagerThe residual appraisal, the worked scheme, land diligence and the risk register.
• The Real Estate Secondaries InvestorAn eighteen per cent discount to net asset value that is really 9.18 once the reported value is unsmoothed.
• The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
• Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
• Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
• Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
• Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
• Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
• Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
• Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
• Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
• Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
• DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
• The Private Equity Secondaries InvestorThe seller’s floor beside the buyer’s ceiling — and the zone that usually is not there.
• Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
• Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
• Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.