What is a Liquidity Risk Analysis Forecast Report?

Liquidity Risk Analysis reports are considered financial management tools and are used by financial managers to monitor and project the company’s liquidity. Some of the key functionality in this type of report is that it allows the user to score the risk weighting of the various drivers of the overall liquidity risk number seen in the image below. The user can expand the section below the risk rating to see each component, such as cash, receivables, EBITDA, payables, debt, etc. The report pulls these figures from the underlying Cash Flow forecast, which again ties to the Profit & Loss and Balance Sheet forecast. You find an example of this type of report below.

Purpose of Liquidity Analysis Reports

Companies and organizations use Liquidity Analysis Reports to analyze historical periods as well as forecasted periods to better manage liquidity and unforseen as well as planned business activities that requires cash or financing. When used as part of good business practices in a Finance & Accounting Department, a company can improve its liquidity-related decisions as well as reduce the risk that it runs out of money.

Liquidity Analysis Report Example

Here is an example of a easy to read Liquidity Risk Analysis report. Because of all the graphical elements, it could also be referred to as a Dashboard.

Liquidity Risk Analysis Forecast Report Example

Liquidity Risk Analysis Forecast Report Example

 

You can find hundreds of additional examples here

Who Uses This Type of Report?

The typical users of this type of report are: The Board of Directors, CEOs, CFOs, Treasurers and Analysts.

Other Reports Often Used in Conjunction with Liquidity Analysis Reports

Progressive Finance & Accounting Departments sometimes use several different Liquidity Analysis Reports, along with forecasts and reports for profit & loss, balance sheet, cash flow, receivables aging analysis and other management and control tools.

Where Does the Data for Analysis Originate From?

The Actual (historical transactions) data typically comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Netsuite and others.

In analysis where budgets or forecasts are used, the data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions.

What Tools are Typically used for Reporting, Planning and Dashboards?

Examples of business software used with the data and ERPs mentioned above are:

  • Native ERP report writers and query tools
  • Spreadsheets (for example Microsoft Excel)
  • Corporate Performance Management (CPM) tools (for example Solver)
  • Dashboards (for example Microsoft Power BI and Tableau)

Corporate Performance Management (CPM) Technology Solutions and More Examples