---
name: liquidity-stress-test-calculator
description: "Runs a 13-week and 6-month liquidity stress test across bear/base/bull scenarios, calculating minimum cash runway, projecting covenant breach dates, quantifying the funding gap, and ranking liquidity levers by speed and dilution. Use when modeling cash runway under pressure, testing survival against downside scenarios, forecasting covenant breaches, or building a liquidity defense plan for a board or lender."
argument-hint: "[current-cash] [scenario-assumptions]"
allowed-tools: ["Read"]
---

# Liquidity Stress Test Calculator

## Purpose
Model a company's liquidity position under bear, base, and bull scenarios to reveal the exact week cash runs short, when covenants breach, and how large the funding gap is — then rank the available liquidity levers by how fast they generate cash and how much they cost. Turns a vague "we might be tight in Q3" into a defensible, dated survival plan.

## When to Use
Invoke this skill when the user asks to:
- Stress-test cash runway or model liquidity under downside scenarios
- Determine how many weeks or months of cash remain before the tank runs dry
- Forecast when a debt covenant will breach and by how much
- Quantify a funding gap and evaluate options to close it
- Build a liquidity defense plan or cash-preservation case for the board or lenders
- Pressure-test a turnaround or restructuring plan against a bear case

## Inputs Required
Before starting, collect:
- **Current liquidity**: Cash on hand + undrawn revolver capacity, as of a stated date
- **Weekly or monthly cash flows**: Recent operating cash inflows/outflows (last 8–13 weeks if available)
- **Fixed obligations**: Debt service (P&I), lease payments, payroll cycles, tax payments, and any known lump-sum outflows with dates
- **Covenant terms**: Financial covenants (e.g., minimum liquidity, leverage ratio, DSCR, fixed-charge coverage), thresholds, and test dates
- **Scenario drivers**: What changes in bear vs. bull — revenue swing %, collection/DSO shift, margin change, customer concentration risk
- **Available levers**: Known options — undrawn facilities, AR factoring, asset sales, cost cuts already identifiable, equity access, vendor terms
- **Time horizon**: 13-week (default) and/or 6-month view

If weekly cash flow detail is unavailable, build monthly and note the reduced precision; if covenant terms are missing, model liquidity runway only and flag covenants as unassessed.

## Instructions

### Step 1: Establish the Starting Position and Base Case
- State starting liquidity = cash + undrawn committed facilities, dated.
- Build the base case cash flow bridge: opening liquidity → operating inflows → operating outflows → fixed obligations (debt service, leases, payroll, tax) → closing liquidity, period by period.
- Use the 13-week view for near-term precision and the 6-month monthly view for the covenant horizon.
- Distinguish committed liquidity (drawable today) from theoretical liquidity — only count facilities without a borrowing-base or MAC constraint that could block a draw.

### Step 2: Define the Three Scenarios
Set explicit, quantified drivers for each — never label a scenario without stating what changes.

- **Bear (survival case)**: Model realistic stress, not catastrophe. Typical drivers: revenue down 15–30%, DSO extends 10–20 days, one major customer delays or churns, margin compression from discounting. This is the case the plan must survive.
- **Base (management case)**: Current trajectory with no heroic assumptions. This is what's most likely if nothing dramatic changes.
- **Bull (recovery case)**: Achievable upside — collections normalize, revenue recovers, a pipeline deal lands. Used to show the range, not to plan around.

For each scenario, apply the drivers to inflows and outflows and re-run the liquidity bridge.

### Step 3: Calculate Minimum Cash Runway
For each scenario:
- Identify the **trough week/month** — the lowest closing liquidity point across the horizon.
- Report the **date liquidity hits zero** (or the minimum operating cash floor, if the company must maintain a working minimum).
- Report **weeks/months of runway** from today to that trough.
- Flag the specific outflow(s) that drive the trough (e.g., "quarterly debt service in Week 9 combined with the payroll cycle").

### Step 4: Project Covenant Breach Triggers
For each covenant, in each scenario:
- Calculate the covenant metric at each test date under the scenario's projected financials.
- Identify the **first test date the covenant breaches** and the **breach magnitude** (e.g., "DSCR projected at 1.05x vs. 1.20x required — a 0.15x shortfall").
- Note where a covenant breaches *before* cash runs out — often the binding constraint is the covenant, not the cash.
- Flag cross-default risk: whether one breach triggers others.

### Step 5: Quantify the Funding Gap
For the bear and base cases:
- **Peak funding need** = the maximum cumulative liquidity shortfall below the minimum cash floor across the horizon.
- State the gap as a dollar figure and the week/month it peaks.
- Separate the **operating gap** (from cash burn) from the **covenant gap** (cash or waiver needed to cure a covenant), since they may require different remedies.

### Step 6: Rank Liquidity Levers
Assess each available lever on three axes and present as a ranked table:
- **Speed to cash**: Days/weeks until cash actually lands (immediate <2 wks / short 2–8 wks / slow >8 wks)
- **Cash quantum**: Dollar amount the lever realistically produces
- **Cost/dilution**: Interest, fees, equity dilution, operational damage, or strategic cost

Standard lever categories to evaluate, fastest-first:
1. **Working capital**: Accelerate AR (collections push, factoring), stretch AP within terms, reduce inventory
2. **Facility drawdowns**: Undrawn revolver, delayed-draw term loan, subject to borrowing base
3. **Cost actions**: Discretionary spend freeze, hiring freeze, deferred capex, headcount reduction
4. **Asset monetization**: Sale-leaseback, non-core asset sale, receivables sale
5. **Capital raise**: New debt, equity injection, sponsor support
6. **Lender engagement**: Covenant waiver/amendment, debt service deferral, standstill

Rank by speed-adjusted impact: prioritize levers that close the gap *before the trough week*, not after.

### Step 7: Build the Liquidity Defense Plan
- State the binding constraint: cash runway or covenant breach, and its date.
- Sequence the levers that close the bear-case gap in time, showing cumulative cash impact against the trough.
- Identify the single most important action to take this week.
- Define the trigger points that should escalate the response (e.g., "if collections fall below X by Week 4, initiate lender conversation immediately").

## Output Format
- **Structure**: Executive summary of survival conclusion → scenario assumptions table → three-scenario runway results → covenant breach table → funding gap quantification → ranked lever table → sequenced defense plan
- **Length**: 900–1,300 words plus tables
- **Format**: Structured document with tables for scenarios, covenants, and levers; prose for the summary and defense plan
- **Sections**: Bottom-Line Conclusion → Starting Position → Scenario Assumptions → Minimum Cash Runway (by scenario) → Covenant Breach Analysis → Funding Gap → Ranked Liquidity Levers → Liquidity Defense Plan → This-Week Priority
- **Tone**: Treasury/turnaround advisor — direct, numbers-first, no hedging on the survival conclusion

## Quality Checklist
Before delivering output, verify:
- [ ] All three scenarios have explicit quantified drivers — no unlabeled "downside"
- [ ] Minimum cash runway is reported as a specific week/month and date for each scenario
- [ ] Covenant breach analysis states the first breach date and shortfall magnitude, or explicitly notes covenants were not assessed
- [ ] The funding gap is a specific dollar figure with the week it peaks
- [ ] Every lever is ranked on speed, quantum, and cost/dilution — not listed generically
- [ ] The defense plan sequences levers that close the bear-case gap *before* the trough week
- [ ] The binding constraint (cash vs. covenant) is named explicitly

## Notes
- The most common fatal error is assuming full revolver availability — always check for borrowing-base or material-adverse-change conditions that can block a draw exactly when cash is needed.
- Covenants frequently breach weeks before cash runs out; when they do, the covenant is the binding constraint and lender engagement moves to the top of the plan.
- Bear case should be survivable-but-painful realistic — a doomsday scenario no one believes gets ignored by the board and wastes the exercise.
- Speed beats size when the trough is near: a smaller lever landing this week can matter more than a larger one landing after cash hits zero.
- If the exercise reveals no combination of levers closes the bear-case gap in time, say so plainly — that finding is the most valuable output, and it changes the conversation to restructuring or capital raise before options narrow.

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## How to use this skill

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**Using in Claude.ai, ChatGPT, Gemini, or other AI tools:**

1. Drag this file into a new chat, or copy and paste its contents
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