# Case study 01: A connected company operating plan

**Decision:** How do customer growth, retention, pricing, direct costs, spending, investment and collections change profitability and cash needs?

Northstar Cloud is a fictional subscription software business. Models 01-06 share fixed FY2024-26 actuals, the approved FY2026 budget and FY2027-29 outlook. Model 07 remains a separate filing case.

**Read the source in finance terms:**

1. **Protect the comparison.** Build fixed actuals and budget from source recipes. Carry actual FY2026 closing accounts into the forecast; controls never rewrite history.
2. **Roll customers.** Opening customers less monthly churn plus acquisitions gives closing customers. Average opening and closing balances for the month's billed volume.
3. **Build revenue and gross profit.** Multiply average customers by monthly ARPU, show subscription and usage/service revenue, then deduct hosting, support and processing.
4. **Plan departments.** Allocate fixed cash OpEx across sales/marketing, product/engineering and G&A, with payroll and other costs separate. Spread it monthly and grow it 4% each new plan year. Contingency spending is explicit.
5. **Bridge EBITDA to net income.** Deduct asset-schedule depreciation/amortization and opening-debt interest. Cash tax is 25% of positive monthly pre-tax income, without loss carryforwards.
6. **Explain investment.** CapEx is 85% equipment and 15% software. New assets begin 60-month depreciation or 36-month amortization the following month. CapEx grows 3% each plan year; historical asset lives continue.
7. **Explain working capital.** Collection days determine receivables. Other explicit days assumptions determine prepaids, payables, accruals and deferred revenue. Increased operating net working capital consumes cash.
8. **Reconcile cash.** Start with net income, add noncash charges, deduct working-capital changes, capital investment and scheduled debt repayments.
9. **Expose financing needs.** When cash would be exhausted, show uncommitted external funding required as financing debt. Liquidity/risk show cash before this funding. Financing availability is not assumed.
10. **Close and check.** Roll profit into retained earnings and balances into the next month. Check the balance sheet, cash roll-forward, EBITDA and profit-to-cash reconciliation every month. Sum flows, retain closing balances and recalculate ratios for annual reporting.

**Illustrative base FY2027:** about $18.60M revenue, $3.90M EBITDA, $1.69M net income, $1.98M FCF and $5.05M closing cash, with no new funding required. FCF means operating cash less CapEx and includes operating interest/tax; separate unlevered FCF uses EBIT-based tax.

**Reviewer experience:** Shared scenarios update EBITDA, liquidity, forecast and overview views. Annual/monthly income statements, balance sheets and cash flows expand independently and have CSV exports with units and scenario labels. Model 03 applies repeatable acquisition, ARPU and margin shocks to this same engine and reports profit/cash distributions and full-horizon cash-floor breaches.

**What this demonstrates:** Driver-based FP&A, linked accounting schedules, scenario governance, operating risk, cash planning, reporting automation and auditable finance logic.

**Scope:** Illustrative management statements, not a full GAAP package. No seasonality, cohort/product mix, acquisitions, disposals, dividends, leases, stock compensation, FX, deferred taxes or NOL schedules. Risk distributions are assumed, not empirically calibrated. JavaScript and Python comments explain each business step before its calculation.