Call with the CFO - Microsoft Excel Tutorial

- [CFO] Hey Chris. Hi, how you doing? Are you there? - [Chris] Yeah, I'm here. How's it going? - [CFO] Good. Good. Hey, we've got an important strategic project we've been assigned by the CEO and the board. We're going to change our product line a little bit and look at profitability down the road. I think, you know, our main customers have been big box retail stores, Walmart, Target, and the like. They're terrific, but they always are looking to lower their costs for their own goods. They squeeze our margins. They want lower unit costs, they want big volume discounts. Sometimes they slow pay the accounts receivable and that's okay. That's our business, we know that. But we want to see if we can't strategically reverse some recent trends where our profitability's been reducing. We want to see if we can't increase it by selling some of our product direct to the consumer online. We'd have to rebrand it a little bit. We'd have to buy some new equipment, hire some new staff, probably add to the debt. 'Cause we're going to need a warehouse to handle the sales and returns and that sort of thing. I'm going to send you a list of assumptions about debt and headcount and growth assumptions and things like that that I think are reasonable. Love your input on that as well. And I think the big thing though is to think about our bank and our existing covenants and whether or not we can easily comply with a higher debt amount. Can we comply with the leverage ratio? Can we comply with the interest charge coverage? And I want to make sure we have at least 500,000 of cash minimum on hand each month. But if there's excess cash, we'll sweep it down towards the debt and revolver first. And then the term loan, like we typically do. This is an important thing for the CEO and the board. I know you have an A team on this so just wanted to give you that heads up. Take a look for the file I sent you. Just let me know what you think. - [Chris] Yeah, okay. No, that sounds fine. Yeah, I presume you'll have notes in the margin on how you want things modeled out. I'll make as many inputs as I can so that we can tinker with it and move some things around. And then as more detail comes up, we can maybe build out a few more sub schedules. I figure maybe two, three years by month or what do you kind of think there? - [CFO] Yeah, that'd be fine. And I agree, lots of variables. You and I are going to need to brainstorm all of the details on this. 'Cause the strategy sounds great, but until you see the numbers and you know that works, we're not going to go into this with that with any confidence until people quote, see the numbers. - [Chris] Okay. And you mentioned like a, some capital expansion. What kind of, how much do you think the total project is going to cost and how do you want to finance it? - [CFO] I'm using a $4 million figure for now. We're going to put it on the term loan. We're going to have to add to the term loan with the bank. - [Chris] Okay. Got it. So just if I'm zooming out, we're getting a little bit squeezed on margin. We're going to explore some online sales but we need to expand some of our distribution capabilities. So we're going to do, it looks like 4 million on the term loan. And your top priority is to understand can we take on this project and be in covenant compliance with the lender. So that's your bottom line. - [CFO] You got it. You got it. - [Chris] Yeah, okay. Got it all. I'm just going to just bold this in my notes. All right. I got what I need. I will take a look for that file when you send it over. And then I will send you an email when I've got the model ready to go and we can talk through it from there. - [CFO] Good. Gimme a heads up in a day or two. That sounds great. - [Chris] Okay, you got it. All right, thanks. - [CFO] Good, thanks Chris. See you. - [Chris] Yep. Bye.