Part III · Capital, Ownership and Enterprise Value
Chapter 11Cash, Financing and Financial Resilience
A CFO must explain not only whether the P&L is correct, but where cash went, when it may return, which obligations must be protected and what funding remains. This chapter connects working capital, capex, debt, owner obligations and downside risk through a practical thirteen-week cash forecast and liquidity decision process.
Questions this chapter helps answer
- • Why can a profitable hotel have little or no distributable cash?
- • What is the difference between cash in the bank and genuinely available cash?
- • How should receivables, inventory, deposits and payables be treated as operating decisions?
- • How can a thirteen-week cash forecast become a management process rather than a spreadsheet?
Key concepts
- • liquidity
- • working capital
- • cash availability
- • thirteen-week cash forecast
- • financing choices
- • financial resilience
A CFO must explain not only whether the P&L is correct, but where cash went, when it may return, which obligations must be protected and what funding remains. This chapter connects working capital, capex, debt, owner obligations and downside risk through a practical thirteen-week cash forecast and liquidity decision process.
Chapter-end learning
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Connect the chapter to a real hotel decision
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Discussion prompt 1
The chapter distinguishes bank cash from available cash and requires the five Available-Cash tests plus a liquidity floor.
A hotel has a strong bank balance, but a large part comes from advance group and wedding deposits. The owner requests a distribution. What should the CFO present before recommending a payment?
Reconcile earned/collected cash, deposits and future service costs, restrictions, payroll, suppliers, tax, debt, capex, the 13-week forecast, the liquidity floor and downside. Recommend a distribution only from cash that remains genuinely available after those obligations.
Discussion prompt 2
This case connects Chapter 9 capital judgment with Chapter 11 funding capacity.
A critical asset has been repaired repeatedly. Replacement has lower lifetime cost, but current hotel cash is insufficient. How should the CFO compare the options?
Compare continued repair, downtime and service risk with owner equity, debt, equipment finance, leasing, supplier credit and delayed replacement. Include financing cost, covenant/liquidity impact and the cost of another failure. The economically best asset choice must be tested against the company's ability to fund it safely.
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