REFERENCE FUNDING RECOMMENDATION AND MODEL HANDOFF — Ridgeway Pumps v1.0, 10 October 2026. Original fictional teaching case; author solution for self-review.

Purpose and conclusion: test whether the 2027–2029 operating plan maintains annual closing cash of 75 USD thousands within a 150 revolver. Base requires a first-year draw of 60.020875 and maintains the floor. Downside remains unfunded: first-year gap to the floor is 171.0625 after drawing the full facility; the three-year maximum gap is 240.974. A negative cash residual is diagnostic, not an authorized overdraft. Do not approve the downside as currently financed.

Actions: validate the collection and inventory assumptions with their owners, test deferral of nonessential capex, suspend the proposed 10 first-year dividend as a partial measure, and obtain committed finance if the remaining gap cannot be removed. Dividend suspension alone leaves a first-year gap of 161.0625, all else held constant. Quantify later effects separately; borrowing changes future interest. Consider delivery, capacity and supplier consequences before reducing investment or stock. Confirm contractual availability and covenants before treating the 150 facility as usable.

Inputs and sources: supplied original History has opening 2024 balances and full 2025–2026 income/cash-flow history. Assumptions contains three coherent cases, a 1–5-year decision horizon, operating drivers and finance policy. Units are USD thousands, except volume in thousand units and price in USD/unit. Blue values are inputs, green formulas cross sheets and dark formulas calculate locally. Preserve source values and record each changed cell, rationale, date and owner.

Dependencies: Assumptions drives Operations, Working capital and Assets. Those feed Funding, which links to Statements and Review. There are no external workbook links or macros. All five years calculate; the horizon selects the decision endpoint without liquidating balances. Recalculate after editing, record the result, then restore the baseline before the next isolated sensitivity.

Accounting and timing: year-end additions start depreciation/amortization next year. Opening net asset pools use their stated remaining lives. Interest is on opening term plus revolver debt, avoiding intentional circularity; year-end draws affect next-year interest. Positive current taxable profit is taxed at 25%; a stated share remains payable. No deferred tax or loss carryforwards. Mandatory term principal precedes capped draw/repayment, followed by a 50% surplus sweep, all preserving the cash floor only when financing capacity allows.

Checks and evidence: balance sheet, cash, direct versus indirect CFO, debt, net/gross fixed assets, software, retained earnings, expense links, facility capacity and draw policy were checked. Base/Downside/Upside, 1/3/5-year horizons, changed AR, capex, later-year volume and equity were tested. Four deliberate faults were detected and repaired. Separate Python Decimal direct-ledger and vintage calculations cross-check the JavaScript indirect solver; this is an independently implemented calculation, not an independent human review. Blank required formulas report Incomplete.

Limitations and responsibility: annual closing balances cannot reveal monthly or intrayear funding peaks. Commercial assumptions, capitalization/life policy, financing commitment, covenant compliance and the written recommendation require analyst and accounting review. No disposals, impairment, leases, FX, deferred tax or valuation are modelled. The reviewer name and decision remain unassigned in this fictional case; no automatic numerical check approves the plan. Atlas supplies a separate opening statement and terms and must be rebuilt, not relabelled Ridgeway.
