Test whether a proposed fleet purchase clears operating, capital and financing thresholds before cash is committed.
About this analysis
The analysis evaluates one proposed fleet addition using owned-equipment rental revenue, acquisition OEC, operating cash contribution, deployment timing and financing. It solves the operating boundaries at which the purchase stops clearing the selected capital hurdle. For more information, visit our Equipment Rental FP&A practice.
↖ Enter the proposed purchase, then edit financing, hurdle and downside assumptions
The primary hurdle is applied to steady-state operating cash contribution before financing. Financing is tested separately against cash available after scheduled debt service.
Capital hurdle
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Projected dollar utilization
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Owned rental revenue ÷ acquisition OEC
Operating cash contribution
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First constraint
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The required case is the minimum steady-state contribution needed to clear the selected capital hurdle. It is not a forecast.
Each boundary changes one assumption at a time while holding the others constant. Headroom measures the percentage change from the expected input to the failure point.
Year one reflects only the months from the selected deployment month through December. The financing schedule begins in the deployment month for this planning view.
What the analysis shows
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EQUIPMENT RENTAL FLEET ADDITION IMPACT TEST — ILLUSTRATIVE RECORD City Shift Finance DECISION BASIS Hurdle: maximum 36-month unlevered payback Status: CLEARS HURDLE PROPOSED FLEET ADDITION Units: 10 Acquisition cost / unit: $85,000 Acquisition OEC: $850,000 Expected realized rental rate / day: $420 Expected billed rental days / unit / year: 175 Variable cash cost / billed day: $78 Incremental annual fixed cash cost: $72,000 Deployment month: 7 EXPECTED CASE Owned rental revenue: $735,000 Projected dollar utilization: 86.5% Operating cash contribution: $526,500 Unlevered capital payback: 19.4 months Annual cash return on OEC: 61.9% Hurdle contribution required: $283,333 Hurdle gap: +$243,167 DOWNSIDE CASE Rate change: -10.0% Billed-days change: -15.0% Owned rental revenue: $562,275 Operating cash contribution: $374,250 Hurdle gap: +$90,917 DECISION BOUNDARIES — ONE VARIABLE AT A TIME Maximum acquisition cost / unit: $157,950 Minimum realized rental rate / day: $281 Minimum billed rental days / unit: 103.9 Maximum variable cash cost / billed day: $217 First operating constraint: Rental rate FINANCING & YEAR-ONE CASH Down payment: 20.0% = $170,000 Financed principal: $680,000 APR: 7.5% Term: 60 months Monthly payment: $13,626 Scheduled annual debt service: $163,510 Steady-state cash after debt service: $362,990 Year-one months in service: 6 Year-one net cash after down payment and scheduled debt service: +$11,495 METHOD STATUS The primary hurdle is applied to steady-state operating cash contribution before financing. Decision boundaries vary one assumption at a time. This is a planning analysis, not a forecast of future utilization or resale value.
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