CFE Day 1 Cheat Sheet: Cash, Capacity and Decision Boundaries
Use decision tables and compact calculations to connect strategic changes, financing, constrained resources and a workable CFE Day 1 recommendation.
Start with the changed business condition
| Establish | Record | Decision consequence |
|---|---|---|
| Prior direction | Mission, objectives, protected commitments and assumptions behind the approved strategy | An earlier preference is relevant context, not unconditional permission. |
| Current update | New demand, financing, staffing, terms or evidence | Identify which original assumption no longer supports the plan. |
| Binding conditions | Required cash floor, service minimum, authority and delivery date | Eliminate or redesign a package that cannot meet a mandatory condition. |
| Preference among feasible plans | Contribution, long-term value, stakeholder outcomes or an explicit ordered priority | Rank using the board’s actual criterion rather than substituting your own. |
A mission can support a commercial commitment. It does not automatically require indefinite losses, automatic deferral or rejection of every outside partner. Show the remaining trade-off after mandatory requirements are satisfied.
Keep the financial measures separate
| Measure | Useful for | Common error |
|---|---|---|
| Contribution | Revenue less the stated relevant variable costs | Calling contribution profit after fixed costs, or deducting an already included cost twice |
| Operating profit or EBITDA | The specified accounting performance measure | Treating an earnings increase as cash already available to buy equipment |
| Dated cash balance | Whether payments and the minimum reserve can be met | Letting later receipts finance an earlier payment, or omitting a debt settlement |
| Incremental NPV | Discounted future differences between alternatives | Including sunk costs, unchanged allocations or both mutually exclusive benefits |
For a simple period:
\[ C_t=C_{t-1}+R_t-P_t. \]Here \(C_t\) is closing cash at a listed date, \(C_{t-1}\) is the preceding balance, \(R_t\) is receipts and \(P_t\) is payments. Carry each closing balance into the next date. Include opening cash that is actually available, protect only the reserves specified, and keep owner proceeds separate from company cash. If an undrawn facility is available, the peak requirement is:
\[ F=\max\left(0,\ M-\min_t C_t\right). \]Use unfinanced balances for \(C_t\); \(M\) is the required reserve and \(F\) is the largest facility draw needed. Include facility fees and interest in the forecast when applicable.
Example: Opening cash is $180,000. A $90,000 payment precedes a $70,000 receipt; the reserve is $120,000. Cash reaches $90,000 before recovering to $160,000. The required bridge is $30,000 even though closing cash exceeds the reserve. Check availability, fees, conditions and repayment timing before calling a facility suitable.
Test the resource at the place and time it is needed
| Apparent capacity | Reconcile it with |
|---|---|
| Total staff hours | Required skill, supervision, travel, existing obligations and shift availability |
| Total annual output | The promised delivery window, bottleneck stage, maintenance and qualified relief |
| Outsourcing budget | An enforceable supplier commitment, approved quality and capacity available by the deadline |
| Training completed | Independent performance of the actual task, including difficult exceptions |
With one genuinely scarce resource, contribution per bottleneck unit helps rank competing uses:
\[ r=\frac{\text{Contribution}}{\text{Bottleneck units}}. \]The ratio \(r\) uses the relevant contribution and the units of the same scarce resource consumed. Apply protected customer/service commitments first. This ratio does not override a cash floor, indivisible package, second bottleneck or minimum quality outcome.
Compare complete alternatives without double counting
- Include displaced contribution when a new activity takes customers or capacity from an existing one.
- Count a shared customer spending pool once; allocate its purchases between channels using the supplied evidence.
- Exclude unchanged head-office allocations from incremental cash, while including actual additional support.
- Separate a recoverable deposit from a nonrecoverable commitment, and identify whether an exposure ceiling covers new approvals or total spending.
- Compare the best available alternative. Rejecting a lease may mean using a relief carrier, rather than losing all additional sales.
Make evidence change the commitment
| Evidence issue | Stronger response |
|---|---|
| A successful assisted free trial is used to forecast paid self-service demand | Separate purchasing, acquisition and support assumptions for the new channel. |
| A group average meets a target but one protected cohort fails | Test the relevant cohort and outcome; report who remains unserved. |
| A grant application is complete | Distinguish eligibility, award, payment conditions and receipt date. |
| A recommendation acknowledges an unbooked resource | Make enforceable booking a condition of signing, select a feasible smaller scope or decline. |
A useful conclusion names the supported choice, the decisive quantitative and qualitative reasons, the unresolved material condition and who must establish it before commitment. It does not manufacture an official passing threshold or substitute a list of risks for a decision.