Creating cash flow scenarios. While it's possible to do a debt capacity using a simple cash flow model, ideally we would wanna run sensitivities in a complete model so that we can sensitize whatever detail we have. For smaller companies, particularly in an LBO, you'll have very detailed assumptions for revenues and profit. If the sensitivities are done in a complete model, you will be able to get from EBITDA to cash flow much more easily than trying to model by the various line items in a free cash flow statement. Step one is to decide the drivers to sensitize, sales, cost of sales, operating costs, EBITDA, et cetera. If you have the detail, you can be as specific as sensitizing raw material costs, sales in a particular region or for a product line. Secondly, we wanna look historically at what has happened so that we can take the numbers provided by the company and decide what is more reasonably conservative for the bank case. Lastly, for a downside, we wanna understand what happens if it all goes wrong. This will result in a EBITDA or free cash cashflow loss of 20 to 30%. This may not seem reasonable, but the point is to see how bad it could get and then judge how the bank would deal with a situation like that. Is there a second way out of the loan? Other drivers to sensitize are CapEx and operating working capital, especially if the company has issues collecting on accounts and turning its inventory. The last step would be to examine the sensitivities via the traditional credit ratios and or covenants and look for either potential trouble areas or defaults. The downside case is going to look bad and we know that. The conservative case or the bank case is the one that we want to establish as the base case scenario with the company case being more of the upside scenario. From a base case or a bank case, we can then add a margin of error when we are establishing covenants or debt capacity analysis.