Fictional examples
The analysis behind the next decision.
Three different businesses. A recurring process that connects results with choices.
All businesses, figures, and analyses on this page are invented illustrations, not client results or actual software exports. Operating profit is before interest and income taxes. Each example shows how a written report could interpret the model.
Cedar Bend Service Co.
A hiring decision starts with collections
What changed
September revenue was $96,000 against a $100,000 forecast. Gross margin was 42% rather than 45%, leaving operating profit of $8,320 instead of $13,000.
| Month-end cash | October | November | December |
|---|---|---|---|
| No new hire | $34,000 | $38,000 | $45,000 |
| Hire in November | $34,000 | $32,000 | $33,000 |
| 10% lower receipts and hire | $24,500 | $12,500 | $3,000 |
What the comparison shows
The downside scenario breaches the assumed $25,000 reserve before the hire begins. Collections timing and the full cost of hiring are key assumptions for the owner to evaluate.
The next review
At the next monthly review, compare collections and direct costs with the preserved forecast and rerun the hiring case.
Scenario assumptions
Opening cash: $33,000. Monthly receipts: $95,000 / $100,000 / $105,000. Base payments: $94,000 / $96,000 / $98,000. Hiring adds $6,000 in November and December. Downside receipts fall 10%, with payments unchanged. No productivity benefit, financing, or onboarding cost is included.
Each ending balance equals opening cash plus receipts less payments. These simplified cash bridges are not complete financial statements. Month-end balances can hide midmonth shortfalls. Forecasts do not guarantee outcomes.
River Market Home & Gifts
A retailer stages its holiday inventory
What changed
September sales were $72,000 against $80,000 forecast, while gross margin fell from the planned 45% to 40%. Operating profit was $3,800 instead of $11,000.
| Month-end cash | October | November | December |
|---|---|---|---|
| Full $24,000 order | $22,000 | $34,000 | $49,000 |
| Staged $12,000 order | $34,000 | $43,000 | $52,000 |
| Full order, 15% lower receipts | $12,100 | $11,200 | $10,150 |
What the comparison shows
Staging the purchase preserves more near-term cash in this model. The full order leaves only $2,000 above the assumed $20,000 reserve in October, and the downside falls below it. Sell-through and reorder timing affect the comparison.
The next review
Compare actual product margins and inventory movement with the plan before authorizing more stock.
Scenario assumptions
Opening cash: $40,000. Full-order receipts: $66,000 / $86,000 / $107,000. Base payments: $60,000 / $74,000 / $92,000, plus the October order. Staging uses $12,000 in October and assumes lower receipts of $66,000 / $83,000 / $101,000. Downside receipts fall 15% from the full-order case with unchanged payments. No later reorder or financing is included. Inventory purchases use cash before their cost appears in profit as goods sell.
Each ending balance equals opening cash plus receipts less payments. These simplified cash bridges are not complete financial statements. Month-end balances can hide midmonth shortfalls. Forecasts do not guarantee outcomes.
Northline Design Studio
A studio tests pricing before adding capacity
What changed
September revenue met the $60,000 plan, but delivery costs were $30,000 instead of $24,000. Operating profit fell from the planned $11,000 to $5,000.
| Month-end cash | October | November | December |
|---|---|---|---|
| Current economics | $30,000 | $32,000 | $34,000 |
| 10% higher price, same volume | $36,000 | $44,000 | $52,000 |
| Higher price, 10% lower volume | $29,400 | $30,800 | $32,200 |
| Employee, no revenue lift yet | $24,000 | $20,000 | $16,000 |
What the comparison shows
The pricing scenarios illustrate how demand and collections affect cash. The hiring case falls below the assumed $20,000 reserve by December. The owner can compare these assumptions with the business’s capacity and priorities.
The next review
Review realized prices, project delivery costs, and collections against the forecast before extending the pilot or revisiting hiring.
Scenario assumptions
Opening cash: $28,000. Baseline monthly receipts: $60,000; payments: $58,000. Higher pricing produces $66,000 monthly receipts, or $59,400 if volume falls 10%. Prices change in October with same-month collections assumed. Payments stay fixed in the pricing downside. Hiring adds $6,000 monthly payments, with no immediate revenue benefit. No other cash changes are assumed.
Each ending balance equals opening cash plus receipts less payments. These simplified cash bridges are not complete financial statements. Month-end balances can hide midmonth shortfalls. Forecasts do not guarantee outcomes.
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