Loading page
Veteran owned · American made · Honor · Serve · Inspire
Loading page
Use an interactive distributor case to see how inventory purchases and retailer payment terms create a financing gap. Fictional figures; no lending recommendation.
Four guided lessons, hands-on decision sequences, practice checks, and final decisions. Build a plan, test it, then examine the reasoning. Progress stays on this device only.
Open printable study guide / Save as PDF ↗
INTERACTIVE FILE / FICTIONAL DISTRIBUTOR
Move payment and inventory timing. Watch the financing gap change while the model’s operating profit remains fixed. The cash figure is a teaching estimate, not a loan recommendation.
30 + 45 − 25 = 50 days. At $2,000 a day, that models $100,000 tied up. Operating profit in this simplified case does not change.
PREDICT / ADJUST / EXPLAIN
The starting case was 50 days at $2,000 a day: $100,000. Compare your new result.
After this lesson: Identify the timing gap between paying suppliers and collecting from customers.
Profit does not fund payroll until cash arrives. Inventory can be paid before it sells, and customers may pay after delivery. A cash-cycle timeline identifies the gap without assuming every invoice is collected on time.
The distributor pays $30,000 for stock on day 0, delivers on day 30, and expects retailer payment on day 75. Cash is tied up from day 0 through collection; other expenses still have due dates.
Use the briefing above. Select the actions in the order you would take them, then run the sequence.
Apply it: Identify which week is exposed before accepting a large order.
Loading practice…
After this lesson: Calculate cash committed to an incremental order.
Units times landed cost gives the inventory purchase requirement before extra handling and reserves. A larger order can improve revenue prospects while worsening near-term liquidity. Check what is committed versus already funded.
An added 2,000 bars at $12 landed cost tie up $24,000. If $6,000 is due for storage and freight before collections, near-term cash need is $30,000 before a contingency.
Use the briefing above. Select the actions in the order you would take them, then run the sequence.
Apply it: Test a growth proposal against cash instead of only forecast sales.
Loading practice…
After this lesson: Find the minimum projected cash across weeks.
A closing cash figure rolls forward into the next week's opening. The minimum balance matters more than an attractive end-of-quarter figure because bills must be met at due dates. Model late collections as a separate scenario.
Week 1 opens at $35k, collects $5k, pays $20k: closes $20k. Week 2 opens $20k, collects $3k, pays $28k: closes negative $5k. A later $40k collection does not prevent the week 2 gap.
Use the briefing above. Select the actions in the order you would take them, then run the sequence.
Apply it: Spot the first week that needs a change or a verified funding plan.
Loading practice…
After this lesson: Compare timing, terms, and order size before committing.
Do not treat a delayed supplier payment as cost savings. Options include smaller staged orders, confirmed customer deposits, negotiated terms, or suitable financing, each with constraints. Reforecast after every proposed change and document the underlying agreement.
With a negative $5k low week, the distributor stages half the $24k order after supplier agreement, then models the new dates. It checks whether deliveries can still be met and whether later weeks remain positive.
Use the briefing above. Select the actions in the order you would take them, then run the sequence.
Apply it: Select the response that closes the gap without hiding a liability.
Loading practice…
Three new scenarios check what you retained. A missed answer opens a worked explanation and a reworded question.
Loading practice…
Loading practice…
Loading practice…
This preview does not create a verified grade, enrollment, certificate, or purchase. No personal answers leave this browser.
Keep learning with the hands-on case. Test preparation is a separate, harder stage that asks you to calculate, inspect assumptions, and apply the method to unfamiliar facts.
Explore Tier 1 and Tier 2 preparation →Original Aim High Hero explanations and fictional exercises. The external source provides subject reference and does not endorse this course.
U.S. Small Business Administration — Calculate startup costs and cash needs ↗