Which would be considered a use of liquidity in a stress scenario?

Which would be considered a use of liquidity in a stress scenario?

• A. Debt maturities
• B. Asset sales
• C. Cash and liquid assets
• D. Forecasted negative FFO

Answer: (D)

In liquidity stress testing, you look at how cash would be consumed (uses) versus how it could be raised (sources). A use of liquidity is a cash outflow you must fund. Forecasted negative FFO signals a future cash shortfall from operations, so you would need to deploy liquidity to cover that deficit. Asset sales and cash and liquid assets are sources or buffers of liquidity, not uses. Debt maturities are obligations to pay, but the forecasted negative FFO directly represents a cash outflow from ongoing operations that consumes liquidity. So the best answer is forecasted negative FFO.

In liquidity stress testing, you look at how cash would be consumed (uses) versus how it could be raised (sources). A use of liquidity is a cash outflow you must fund. Forecasted negative FFO signals a future cash shortfall from operations, so you would need to deploy liquidity to cover that deficit. Asset sales and cash and liquid assets are sources or buffers of liquidity, not uses. Debt maturities are obligations to pay, but the forecasted negative FFO directly represents a cash outflow from ongoing operations that consumes liquidity. So the best answer is forecasted negative FFO.