Optimization of the company's cash flow
This book is about the company's treasuries and financial management, more specifically; it shows how a company can manage its treasury in an efficient and short way.
This book is about the company's treasuries and financial management, more specifically; it shows how a company can manage its treasury in an efficient and short way.
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(b) The Positive Effect.<br />
Swelling <strong>of</strong> <strong>cash</strong> usually causes a reflex <strong>of</strong> investment. It may be that <strong>the</strong> presence <strong>of</strong> liquidity creates from scratch<br />
<strong>the</strong> decision to invest, or allows investments. The contractor may seems to grasp all possible investment<br />
opportunities, once its <strong>cash</strong> situation is evolving favorably.<br />
2 - THE EFFECTS OF INVESTMENT ON THE CASH FLOW.<br />
Any investment is a potential source <strong>of</strong> revenue and pr<strong>of</strong>its that will swell <strong>the</strong> <strong>flow</strong> <strong>of</strong> <strong>cash</strong> available to <strong>the</strong> company.<br />
2.1 - The effects <strong>of</strong> investment on <strong>the</strong> income <strong>of</strong> <strong>the</strong> firm.<br />
The investment increases <strong>the</strong> production capacity <strong>of</strong> <strong>the</strong> firm, and, all o<strong>the</strong>r things being equal, its production and<br />
turnover.<br />
This increase is less proportional because it is always a part <strong>of</strong> <strong>the</strong> investment that is intended to cover <strong>the</strong><br />
depreciation <strong>of</strong> <strong>the</strong> capital assets. The template 'benefit-cost-volume', or neutral, leads to <strong>the</strong> operating leverage<br />
effect that provides <strong>the</strong> foundations for a policy <strong>of</strong> investment designed not only based on <strong>the</strong> imperative <strong>of</strong><br />
pr<strong>of</strong>itability, but also on <strong>the</strong> basis <strong>of</strong> imperative <strong>of</strong> liquidity. You can refine by proposing a neutral to <strong>cash</strong> more<br />
directly linked to <strong>the</strong> <strong>cash</strong> position <strong>of</strong> <strong>the</strong> company.<br />
(a) Operational leverage and <strong>cash</strong> <strong>flow</strong> value.<br />
If we admit <strong>the</strong> three situations <strong>of</strong> IWACO as follows:<br />
The company is fully automated to a higher fixed costs. Thanks to this automation variable costs increase slowly. The<br />
importance <strong>of</strong> overhead costs is that <strong>the</strong> company reached neutral to a higher activity than TENOR and GOCOM.<br />
Figure n°12 : Death-Center <strong>of</strong> Tenor<br />
Figure n°13 : Death-Center <strong>of</strong> Gocom<br />
Page 101 <strong>of</strong> 124
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