Optimization of the company's cash flow

However, once IWACO achieved neutral (dead
center), it sees its cash flow increase faster than
those of the other two companies.
(b) Death-point of cash and risk of insolvency.
Figure n°14 : Death-Center of IWACO
All fixed costs of a business do not correspond to
outputs of Fund; same as a share of income may stay
a while in the form of credit-clients. Thus,
depreciation expense are not output cases. The
following chart shows for example that if on the total
amount of the fixed costs, 30 000, represent
allocations to amortization of cash neutral is located
at a level of production of 12 500 units.
Figure n°14 : Death-Center of IWACO
Neutral of cash does not replace a cash budget but can appreciate the risks of insolvency arising from the operation.
Thus, the company would have a volume of fixed costs as it would suffer losses in period of low activity but would
realize significant benefits during periods of high activity where it can be solvent during these losses, as long as the
outputs «fixed» cash are small enough to allow the company to cross the dead point of cash or as we call it “Dead
Center” or “Neutral”. Therefore, the assessment of the risk of insolvency by neutral of cash indicates a business
conditions to achieve greater benefits (and therefore a higher cash flow), is automating and increasing its leverage
effect without running the danger of a cash crisis.
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