Liquidity Stress Test
Simulates how long a business can survive under stress conditions where revenue drops sharply. Calculates survival days, identifies the minimum cash needed to weather each scenario, and pinpoints the trigger points that require action.
Risk - Liquidity Stress Test.xlsx
Excel (.xlsx) — No macros — Works in Excel, Google Sheets, LibreOffice
What This Spreadsheet Solves
- No quantified survival estimate if revenue drops suddenly
- Minimum cash threshold for continued operations is unknown
- Expense reduction scenarios are not pre-planned for crises
- Decision triggers for cost-cutting measures are undefined
- Accounts receivable delays compound cash stress without warning
Who This Is For
- CFOs and treasurers stress-testing cash reserves
- Startup founders evaluating runway under adverse conditions
- Business owners preparing contingency cash plans
- Risk committees reviewing organizational resilience
Inputs
- $Current Cash and Equivalents
- $Monthly Fixed Costs
- $Monthly Variable Costs
- %Revenue Decline Scenario (%)
- $Accounts Receivable Outstanding
- #Average Collection Period (Days)
Outputs
- Survival days under stress scenario
- Minimum cash to survive 90 days
- Trigger point: month when cash hits critical threshold
- Variable cost reduction needed to extend survival by 30 days
- Net cash position month-by-month under stress
How Calculations Work
The model applies the revenue decline percentage to current revenue and maintains fixed costs at their full amount. Variable costs are scaled proportionally with the reduced revenue. Cash flow is projected month by month, deducting costs from the starting cash balance plus any receivables collected (delayed by the average collection period). Survival is measured as the number of days until cash reaches zero. The model solves for the minimum starting cash needed to survive 90 days and identifies the month where cash crosses the critical threshold.
Example Use Case
Scenario: Cash: $280,000. Fixed costs: $65,000/month. Variable costs: $40,000/month. Revenue decline: 60%. A/R outstanding: $95,000. Average collection: 45 days.
Result: Survival: 142 days (4.7 months). Cash hits critical threshold ($50,000) in month 3. Minimum cash for 90-day survival: $195,000. Reducing variable costs by 50% extends survival to 198 days. A/R collections of $95,000 arrive in month 2, providing a temporary buffer.
What You Get — 5 Sheets
Technical Details
Frequently Asked Questions
What revenue decline scenarios should I test?
Test at least three: mild (25% decline), moderate (50%), and severe (75%). CONFIG includes all three by default. Use actual experience from past downturns if available.
Should variable costs scale linearly with revenue?
The default assumes proportional scaling. In reality, some variable costs are sticky. Adjust the flexibility percentage in CONFIG to model partial stickiness (e.g., 70% means only 70% of variable costs actually decline).
What is the critical cash threshold?
The minimum cash balance below which operations cannot continue (payroll, rent, minimum supplier payments). Default is one month of fixed costs. Set your own threshold in CONFIG.
How do I account for credit lines?
Add available credit line amount to your current cash in the INPUT sheet. Note that this represents total liquidity, not just cash. Mark it separately if you want to track drawn vs undrawn credit.
How often should I run this stress test?
Quarterly under normal conditions. Monthly during periods of economic uncertainty or when the business is experiencing revenue volatility.
Download Liquidity Stress Test
Ready to use immediately. Enter your data in the INPUT sheet, see results in OUTPUT.