Best examples of liquidity and capital resources discussion in MD&A

Strong MD&A starts with real examples, not definitions

The fastest way to understand what works in this section is to study examples of liquidity and capital resources discussion in MD&A that actually answer the questions investors care about:

• Can the company meet its obligations over the next 12–24 months?
• How is it funding growth—internally, through debt, or through equity?
• What could break the model (rates, covenant breaches, refinancing risk, customer concentration)?

Instead of starting with theory, let’s walk through several real‑world style examples that mirror what you see in well‑written 10‑Ks and 20‑Fs.

Example of a high‑cash tech company’s liquidity narrative

Here’s how a mature, cash‑rich tech company might frame its liquidity and capital resources discussion in MD&A:

Liquidity overview
We ended 2024 with \(18.4 billion in cash, cash equivalents, and short‑term investments, compared to \)15.9 billion at December 31, 2023. Approximately 92% of our cash is held in the United States. We believe existing cash balances, cash flows from operations, and available borrowings under our $5.0 billion revolving credit facility will be sufficient to fund operating and capital requirements for at least the next 12 months and the foreseeable future.

Cash flow drivers
Operating cash flows increased 14% year over year, primarily driven by higher subscription billings and improved collections. Capital expenditures were \(2.1 billion, mainly for data center expansions. We expect 2025 capital expenditures to be between \)2.3 billion and $2.6 billion, funded primarily from operating cash flows.

Capital allocation
During 2024, we repurchased \(4.0 billion of common stock under our authorized repurchase program and paid \)1.2 billion in dividends. We intend to continue returning capital to shareholders while maintaining flexibility to pursue strategic acquisitions.

This style of disclosure hits the heart of liquidity and capital resources: level and location of cash, access to credit, forward‑looking funding expectations, and how capital is being deployed. It’s one of the best examples of how to give investors a clear, data‑driven snapshot without drowning them in jargon.

Example of a leveraged industrial company under interest rate pressure

A very different example of liquidity and capital resources discussion in MD&A comes from a capital‑intensive, leveraged business facing higher interest rates:

Liquidity and debt profile
As of December 31, 2024, we had \(350 million of cash and cash equivalents and total debt of \)3.2 billion, resulting in net debt of \(2.9 billion. Our primary sources of liquidity are cash on hand, cash generated from operations, and our \)800 million revolving credit facility, of which $620 million was available at year‑end.

Interest rate environment
Approximately 65% of our debt is at variable interest rates. The increase in benchmark rates during 2024 raised our annual interest expense by approximately \(48 million. A 100 basis point increase in rates would increase annual interest expense by an additional \)21 million, based on year‑end balances.

Covenants and headroom
Our revolving credit facility contains financial covenants, including a maximum net leverage ratio of 4.5x. As of December 31, 2024, our net leverage ratio was 3.7x, providing headroom of approximately $350 million in additional borrowings at current EBITDA levels.

Refinancing risk
We have $900 million of term loans maturing in 2026. We intend to refinance these obligations well in advance of maturity and are evaluating options including term loan repricing, bond issuance, and potential asset sales.

This is the kind of MD&A language lenders and rating agencies pay attention to. Among the best examples of liquidity and capital resources discussion in MD&A, it clearly ties leverage, covenants, and refinancing risk to the company’s ability to operate and invest.

Example of a growth‑stage company with negative free cash flow

Growth companies often burn cash by design. Investors still expect examples of liquidity and capital resources discussion in MD&A that explain the runway and funding plan:

Cash runway and funding strategy
We generated negative operating cash flows of \(210 million in 2024, compared to negative \)165 million in 2023, reflecting higher R&D and sales investments. Capital expenditures were \(65 million, primarily related to new manufacturing capacity, resulting in negative free cash flow of \)275 million.

We ended 2024 with $520 million in cash, cash equivalents, and marketable securities. Based on our current operating plan, we believe our existing cash resources will fund operations and planned capital expenditures for at least the next 24 months.

Capital resources
Our primary sources of capital have been equity issuances and, to a lesser extent, equipment financing. We filed a universal shelf registration statement on Form S‑3 in 2024, providing flexibility to raise additional capital through debt or equity offerings as market conditions permit.

Here, the key is transparency about burn rate, time horizon, and the tools available to extend that runway. Analysts looking for examples of liquidity and capital resources discussion in MD&A for high‑growth names often benchmark this type of disclosure across peers.

Example of a regulated utility with heavy capital spending

Utilities and infrastructure companies are constant case studies in long‑term capital planning. A typical example of liquidity and capital resources discussion in MD&A might read:

Capital spending and funding plan
We expect capital expenditures of approximately $4.8 billion over the 2025–2027 period, primarily for grid modernization, renewable generation, and environmental compliance projects. We intend to finance these investments through a mix of operating cash flows, long‑term debt, and equity issuances through our at‑the‑market (ATM) equity program.

Regulatory framework
Our liquidity and capital resources are significantly influenced by our regulatory environment. Rate case decisions by state commissions determine the timing of cash recovery for our capital investments. In 2024, approved rate increases are expected to generate approximately $310 million in additional annual revenue.

This style ties liquidity directly to the regulatory model, a nuance that matters in sectors where cash recovery is driven by rate cases rather than pure market pricing.

Example of a company facing a short‑term liquidity squeeze

Sometimes the most informative examples include situations where liquidity is tight. Here’s how a candid MD&A might handle that:

Short‑term liquidity constraints
During the fourth quarter of 2024, we experienced a temporary increase in working capital requirements due to extended collection cycles from several large customers and elevated inventory levels related to supply chain disruptions. As a result, we drew $150 million under our revolving credit facility, which had previously been undrawn.

We are working with customers to normalize payment terms and implementing inventory reduction initiatives expected to release approximately $80 million of cash during 2025. We are also in discussions with our lenders to increase the size of our revolving facility and extend its maturity.

Regulators have repeatedly reminded companies that MD&A should discuss known trends and uncertainties, not just historical numbers. The SEC’s MD&A guidance (see, for example, the Commission’s interpretive release on MD&A expectations on SEC.gov) is clear on this point.

Example of cash management and geographic concentration

Another angle often seen in the best examples of liquidity and capital resources discussion in MD&A is geographic concentration of cash and related risks:

Geographic distribution of cash
As of December 31, 2024, we held $3.1 billion of cash and cash equivalents, of which approximately 68% was held by foreign subsidiaries, primarily in the European Union and Asia‑Pacific. While we do not currently anticipate a need to repatriate foreign earnings to fund U.S. operations, changes in tax law or business conditions could impact our cash management strategy.

Foreign exchange and capital controls
Certain countries in which we operate impose restrictions on cross‑border cash transfers. We monitor these restrictions and maintain local credit facilities to fund operations in those jurisdictions.

This kind of disclosure became more common after tax reform and increased geopolitical risk. Investors now expect these real examples of how global cash balances affect liquidity.

Key elements to highlight when drafting your own MD&A

If you’re trying to write better MD&A, use these examples of liquidity and capital resources discussion in MD&A as a checklist. Strong sections usually:

• Quantify cash, debt, and available credit, not just describe them.
• Explain changes in operating, investing, and financing cash flows.
• Address interest rate exposure, covenant headroom, and refinancing timelines.
• Describe capital allocation: dividends, buybacks, acquisitions, and capex.
• Discuss known trends: inflation, supply chain, customer behavior, or regulatory shifts.

The SEC’s 2020 MD&A modernization rules, now fully baked into practice, emphasize a narrative that connects historical cash flows to future liquidity. The Commission has repeatedly emphasized a “known trends and uncertainties” lens; the staff’s MD&A guidance and comment letters (available on SEC.gov) are worth reading if you want to see how they react to thin or overly generic liquidity disclosures.

For a more academic perspective on disclosure quality and investor behavior, research from institutions like Harvard Law School’s Program on Corporate Governance often analyzes MD&A practices and their impact on markets.

2024–2025 trends shaping liquidity and capital resources disclosures

The environment in 2024–2025 is forcing companies to sharpen their MD&A narrative around liquidity:

• Higher and more volatile interest rates. Companies are quantifying sensitivity to rate moves and explaining fixed vs. floating mixes.
• Tighter credit conditions for weaker credits. Expect more discussion of refinancing plans and alternative funding sources.
• Supply chain and inventory swings. Many MD&As now break out working capital movements and explain how quickly they can be reversed.
• ESG and climate‑related capital needs. Infrastructure, energy, and manufacturing companies increasingly link decarbonization capex to long‑term funding plans. The SEC’s climate disclosure efforts and global frameworks like the ISSB standards are influencing how future capital requirements are framed.

When you look at the best examples of liquidity and capital resources discussion in MD&A from large‑cap filers, you’ll notice they treat this section as a forward‑looking risk and strategy narrative, not a compliance afterthought.

Practical tips to avoid generic MD&A boilerplate

If your goal is to move closer to the best examples described above, focus on:

Be specific with numbers and timeframes.
Instead of saying, “We have adequate liquidity,” say, “We expect existing cash and our undrawn $400 million revolver to cover operating needs and planned capex for at least the next 18 months, assuming revenue grows mid‑single digits and input costs remain at current levels.”

Connect liquidity to strategy.
Explain how your capital resources support your business model: recurring revenue stability, long‑term contracts, or regulatory frameworks that underpin cash generation.

Discuss downside scenarios.
Without turning MD&A into a stress‑test report, explain what happens if revenue dips, rates rise, or a key customer is lost. The better examples of liquidity and capital resources discussion in MD&A include at least some sensitivity or scenario framing.

Align with risk factors and financial statements.
If your risk factors talk about leverage and refinancing risk, your liquidity section should echo that reality with numbers and timelines. Inconsistencies are a red flag for both investors and regulators.

For broader context on financial reporting and investor decision‑making, the Financial Accounting Standards Board (FASB) and academic resources at institutions like MIT Sloan or Harvard often publish research on how narrative disclosures influence capital markets.

FAQ: Liquidity and capital resources in MD&A

Q1. What are some good examples of liquidity and capital resources discussion in MD&A?
Good examples include disclosures that quantify cash on hand, undrawn credit facilities, near‑term debt maturities, and covenant headroom, and then clearly explain how the company plans to fund operations and investments over the next 12–24 months. The sample narratives above for a cash‑rich tech company, a leveraged industrial, and a growth‑stage firm are all modeled on real‑world filings and reflect the level of detail investors now expect.

Q2. What is an example of poor liquidity disclosure in MD&A?
A weak example of liquidity and capital resources discussion in MD&A would be a paragraph that simply states, “We believe our existing cash and credit facilities are sufficient to meet our needs,” without any numbers, maturity profile, or discussion of risks such as interest rate exposure, customer concentration, or refinancing needs.

Q3. How detailed should the discussion of covenants and refinancing be?
If covenants are tight or upcoming maturities are large relative to cash flow, the MD&A should say so plainly. Among the best examples, companies disclose current leverage ratios versus covenant limits, describe available headroom, and outline their refinancing game plan well before maturities loom.

Q4. Where can I find more real examples of liquidity and capital resources discussion in MD&A?
Public company annual reports and Form 10‑Ks filed on SEC.gov are the primary source. Look at large‑cap names in your industry and compare how they discuss cash, debt, and capital allocation. Academic and practitioner commentary from sites like the Harvard Law School Forum on Corporate Governance also highlights standout disclosures and regulatory expectations.

In short, the strongest MD&A sections on liquidity and capital resources read like an honest funding memo to the board: here’s the cash we have, here’s what we expect to generate, here’s what we need to spend, and here’s how we’ll bridge the gap if conditions turn against us. If you use the examples of liquidity and capital resources discussion in MD&A above as a benchmark, you’ll be well ahead of the usual boilerplate.