// DIAGNOSTIC READING
Pacific Premium pattern · mature crisis (D2 EXTREME)
MATURE_CRISIS
EBITDA positive, operating cash negative — earnings are not cash.
// DIAGNOSTICS / THREE DIAGNOSTICS
FROM HIGHBANK PRESS
// CALCULATOR · NO SIGNUP
The Three Diagnostics
A working capital request is a claim about the future. The Three Diagnostics test the claim against the past — by looking at the three places where the truth tends to live.
The Three Diagnostics framework tests three signals: whether the revenue growth shows up in the receivables (or whether it was bought with extended terms), whether reported earnings convert to cash (or stay trapped on the balance sheet), and whether the borrower is stretching suppliers to fund the gap.
Enter the numbers below. The tool will return what a senior banker would see. The default values are pre-populated with Pacific Premium Foods data — the case in the current live drill. Replace with your own borrower's numbers, or load a different example below.
// INPUTS
// THIS YEAR
// PRIOR YEAR
// DIAGNOSTIC READING
DIAGNOSTIC 1 — IS THE GROWTH REAL?
STRONG SIGNALRevenue growth50.0%
DSO movement+34 days (48 → 82)
DSO growth vs revenue growth+71% vs +50%
READING
Revenue grew, but DSO grew faster still. Customers are paying materially slower relative to the revenue ramp — the growth is partly financed from the receivable line, not just from volume. That read stands even before you layer the cash conversion collapse underneath it.
DIAGNOSTIC 2 — DOES EBITDA CONVERT TO CASH?
STRONG SIGNAL — EXTREMEOCF / EBITDA conversion (TY)-16%
OCF / EBITDA conversion (PY)45%
Conversion delta (YoY)-61 ppts
READING
EBITDA still positive, operating cash flow flipped negative. The earnings exist on the income statement but are not converting to cash; conversion has crossed from weak into extreme territory year on year. In a committee pack, this is often the line that forces the conversation from “support with conditions” to “decline as framed unless the bridge is explained and cured.”
DIAGNOSTIC 3 — TREND IN PAYABLES?
CLEARDPO change (days)+3 days (35 → 38)
READING
Supplier-side stretch may or may not yet show as a STRONG SIGNAL on DPO alone — the Pacific Premium case often looks “last to break.” Do not confuse a quiet Diagnostic 3 with a clean trade cycle when Diagnostics 1 and 2 are screaming. The absence of a supplier blowout yet is relief, not absolution.
// SO WHAT DOES THIS TELL YOU?
All three diagnostics confirming a mature crisis read does not require three red badges on every input — it requires the combined picture a senior banker holds in their head: receivables funding growth, earnings not converting to cash, and a facility increase that risks funding the deterioration. The default posture is deep diligence on the cash bridge and a hard look at whether incremental debt cures the cycle or extends it.