Lincoln Electric System (LES) is a municipal utility serving 130,000 customers in and around Lincoln, Nebraska. Facing annual cash-flow fluctuations and a range of business risks, they wanted to establish what level of financial liquidity they would need to meet financial obligations, including debt and operating expenditures.
LES’ CFO had worked with PA in the past and was confident in our ability to deliver a quality product that would be analytically rigorous and developed in a collaborative manner. Building on our financial modelling and risk management expertise, we developed a model to calculate the required liquidity reserves. Our model identified expected operating cash flow, based on historical experience, while accounting for potential financial impact caused by business risks.
The result is a comprehensive risk-based assessment tool that enables LES management to better manage the company's annual financial reserves. The model helps LES communicate their understanding of risks and their implications to external financial rating agencies. At the end of the project, LES asked PA to transfer the knowledge they would need to maintain and update the model as part of their annual financial planning and budgeting process.
To learn more about PA's financial modelling and risk management expertise, please contact us now.