Optimization of the company's cash flow

(b) The improvement of profitability is a Cash Generator
Investment should improve the profitability of the firm and thus the liquidity term. The report 'ROI' (return on
investment) reveals the cause of changes in cash flow:
Change to margin, and
Speed of investment.
Therefore, the equation is written like this:
ROI = ((BENEFIT / TURNOVER) X (TURNOVER / INVESTMENT (ASSETS))
Finally, note that the simple growth of the turnover may be beneficial where the company can use even temporarily
surplus liquidity on an interim basis at its disposal.
These phenomena occur regardless of the size of the company. But in the group T-man Holding and like any other
group of companies, the distribution of dividends comes further inflate the available cash flow.
c) Self-Financing in the Group of Company IWACO / T - MAN HOLDING.
The distribution of dividends is a source of liquidity at the level of a group. Indeed self-financing of a parent
corporation not only his only activity results but also distributions of profits that its subsidiaries were granted to him.
In a group of companies there is a 'facelift' dividends at the end of each fiscal year. It may be interesting to 'govern
the distribution of dividends' so that the desired sum is the place wanted at the time.
Once formed, the cash flow is immediately reinvested in various jobs for a shorter or longer period. Any misallocation
translates into reduced the profitability but also by cash flow at more or less short term. It is therefore for the
company to control this "permanent investment's cash flow.
B. INVESTMENT OF CASH FLOWS
1. Cash-Treasury and Investment Policies, BU1 and BU2
1.1 The influence of the firm’s activity on the circulated capital
Few companies escape a variation seasonal or cyclical activity. For IWACO, this translates either cash in the narrow,
or sometimes by a bloated cash. Seeing the typology, amount and variations, the company with very large annual
variations in the activity benefits from effective banking support campaign credits as was explained earlier. Yet, the
company when it handles these simulated variations, they have interest to study variations in the mass of circulating
capital to better manage their financial resources and avoid any difficulty cash. Understanding fluctuations in
circulating capital, is to know the evolution over time of the elements that make it up. These elements evolve as the
case may be, either according to seasonality of activity (as measured by the monthly variations of turnover), or
depending on the seasonality of supply (measured by the monthly pace of purchases).
For that, it is recommended to calculate the seasonality of the sales and the purchase and then assess their impact
on the different components of the circulating capital. These indices can be calculated as follows:
*The sales seasonality Index:
TSI = [(Turnover x 12 / Annual Turnover)]
*The Purchasing Seasonality Index
PSI = [(Monthly Purchase x 12 / Annual Purchasing)]
Page 104 of 124