Cash projections that don’t look comfortable.

When we validate a company’s value using the Discounted Cash Flow (DCF) method,
we usually forecast cash flows for the next 5 years.

Sometimes, the projected cash balance looks… tight.

This often happens because of things like:

• Heavy CAPEX (investment in assets or equipment)
• Poor cash conversion cycle, for example:
  • Long credit terms given to customers
  • Slow inventory turnover
  • Short payment terms to suppliers

At first glance, it may look like the business “cannot survive”.

This is where judgment matters.

If:

• The company has a strong historical loan repayment record
• Banks have consistently rolled over or refinanced facilities
• The business model requires upfront cash but generates value over time

Then reviewing and adjusting loan assumptions may be reasonable — and plausible.

#ORNA #DCF #BusinessValuation