Optimization of the company's cash flow

There we’ll have as a maximum of the company’s Distribution capacity:
Max (D) 150 = 20 + 5x
Where:
X = 26 Unit
And with considering that Revenue takes this form:
R = 10x
The Cash-Flows will be equals to:
CF = R – C = 10x – (20 + 5x)
CF = 110
X = 26 Unit
b) The limitation of funding possibilities by external resources.
Usually bankers get to be motivated for business when the company's situation is under a good working capital fund,
because on the one hand it must normally have a healthy cash flow, and secondly because it resists the best in
adversity. We have seen here inside IWACO that in reality this criterion is seriously flawed and that the banker will
always prompt the rationale justifications for the reimbursement of any competition sought by the provision of a
capital plan and of a cash plan.
Thus, the possibilities of the company for having loans depend on its forecasting cash. Yet, the evolution of the cash
position also determines its debt capacity.
1.2 - Changes in the liquidity of the firm.
Investment decisions are influenced by changes in the liquidity of the companies. Fears of a cash crisis, even
temporary, can often impede investment. However, the existence of significant liquidity could lead the contractor to
take any opportunity to invest.
(a) The adverse effect.
The adverse effect of this relationship has been highlighted in the preparation of the financial statements that allow
the company to analyze its financial situation present or forecast. The main causes of imbalance of cash are the
rigidity of selling prices and especially the increase in operating expenses.
It would seem that there is a parallel evolution between changes in the percentage of businesses who believe that
their cash has become more difficult and the number of those who have delayed their investment expenditures.
Besides the essential tool used to improve the State of the treasuries is precisely slowing spending in fixed assets
(investment orders) and capital circulating (purchases, production costs, staff costs).
Reverse evolution is less clear-cut. Analysis of the financial situation of the company. On the other hand, reveals the
existence of a relationship of cause and effect between improvement of the cash and the decrease of short-term
debt. Also, one may wonder to what extent this reduction in debt does not correspond to an increase in own funds
locked in circulating capital. Anyway the favorable effect of the appearance of liquidity on the decision to invest is
certain.
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