Optimization of the company's cash flow

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After many simulations of making the company consume the global overdraft each time, this chart represents the final result of how the company’s financial flows and balance would be like. A full consummation of the overdraft, remembering that the company can use the overdraft to pay the supplier in Cash and then do a sort of arbitration between the gained cash and the financial flows. Still, the company has gaps in January, June, July, October, December, where they can increase the amount of cash and INWI purchases. The fact is that the company faces new investment opportunities, but before jumping into ant new business, the company has to verify if the company manages its current cash treasury or not, and the key to do the perfect evaluation is by controlling and managing the financial charges or cash gain gathered from the payment of the supplier. Based on the previous table; the company’s financial costs’ situation was represented as followed: Table n°20 : Company’s Fianancial Costs with BU1 The financial analysis of this results shows that the company, according to the 2016 elaborated simulation, was able to make an annual financial product up to 3 063 945,03 DHS with 1 190 383,84 DHS of financial costs paid as an interest amount for the both the contracted banks. Yet, the financial challenge for the firm is to have the biggest part of the paid amount paid in Cash; which in this case is represented in 66% of cash and 34% using the overdraft. The right definition of this division is that both are held into the same treasury with different rates; cash money on 0.5% financial gain and 5.35% interest rate for the overdraft, which leaves the company with beneficial margin that allows it to cover the financial charges and make profit at the same time. The elaborated simulation could take many forms, and all depends on how much the company looks for covering the financial charges, squeeze the overdraft line, use the global amount of the credit line in other terms, and make financial profit. The goal behind paying in cash is so that the company could gain 0.5% of the paid amount, but also it would allow the firm to have the ability of negotiating the INWI’s line of purchases or the “Objective” as we call it using the firm’s terms, and in the other hand, gain rate points in the suppliers’ classification of the distributers. Bank, firm and financial direction, take the responsibility of the controlling and managing the company’s financial flows, but the only obstacle in this game is that the company doesn’t get the authority over the bank’s decision to increase or decrease the overdraft line, so the only way to make it happen is to represent at the best position the company’s Cash-Plan and increase the company’s financial image in front of the banks. Such a decision of negotiating the overdraft line, either to increase, decrease or to close definitely the account is often related to the company’s realized inflows or outflows; where using the inflows is to prove the amount of cash deposits that the company realize inside the company’s bank account or the outflows to show how the company use the bank’s overdraft line to pay the charges. All in all, the arbitration between the lines obliged the company to maximize at the best the consumption of the overdraft line in one hand and on the other hand to minimize the costs that the company face or to increase the use of the overdraft during the week, month or year in order to show to the bank that the overdraft of the bank account is not enough to cover all the company’s charges. The company faced a new opportunity of investing, and as it’s known, every opportunity of investing comes with the chances of paying double or extra charges, the thing that requires for the company to elaborate a financial study before implanting any new financial flows inside the company, for that, the company added a new treasury independent of the other but based on the financial current situation of the company. The new investment of the company wouldn’t make the company stable financially only, but it could also break the trust with banks if the Page 110 of 124
operation wasn’t beneficial enough for the company. As it looks, the impact of having this new investment inside the company wouldn’t let the company’s financial flows as they look inside the treasury, but they would also change forma when extra flows are added to the account. Therefore, the first step to evaluate the company’s new investment chance was to evaluate its treasury, but before doing that, we had to create an independent cashtreasury for its own and analyze the financial impact of it inside the firm. 1. Creation of a new treasury: BU2’s treasury The new investment of the company will be named as BU2, and in this chapter we will analyze the financial situation of the BU2 treasury cash without integrating the BU1 (original activity) in it. The following chapter will have the important details of creating the new treasury of the BU2. Table n°21: Simulated sales of merchandises for BU2 Since BU2 is adding a commercial activity for IWACO, the treasury was based on few major variables that would give the certain estimated results in case the treasury was stable. a. Estimated purchases: Based on the company’s financial situation and ability of selling, the amounts of this treasury were generated according to the contracted condition with the BU2 supplier for what concerns Quantities, Qualities, Duration, Delivery and Overdraft line. Therefore, the result of the estimated amount were as represented in an estimated amount between 8.000.000.000 DHS and 15.000.000.000 DHS =. b. Months: The months, or the deadlines of buying products depends usually on the contract and negotiated condition of the BU2 supplier, but generally, we based our study on the whole month’s average. c. Amount T.T.C: This amount isn’t different than the one in the first point. The difference is that the first one’s based on estimated contracted conditions, and the second one concerns the personalized amount of the product during the month, basically, this one is decided a day before the start of the month less or more. Page 111 of 124
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The Optimization of the Cash-Treasu
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FOREWORD Nor obtaining the diploma
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This project research is dedicated
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LIST OF ACRONYMS AND ABBREVIATION
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Figure n°1: Determination of the o
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TABLE OF CONTENTS Foreword ........
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SECOND PART: THE PRACTICE OF THE CA
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ABSTRACT Inside a world full of ban
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In addition, the monetary risk is a
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A good financial situation is chara
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Experience and observation prove th
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Whereas part of stocks was practica
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C = ax² + bx + c When the demand a
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The “Stocks” flow time: Average
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It indicates to what extent the rea
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RESULTS + FINANCIAL INTERESTS / FIN
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ANNUAL SALES H.T / NET FIXED ASSETS
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4 - LIMITS THE PREDICTIVE VALUE OF
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This opposition led to the establis
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It will similarly be to calculate t
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However, this document synthesizes
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The cash has then for each day (or
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(b) SHORT-TERM DATA: Beyond the ver
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These three presentations are well
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Manage cash consists, in the tradit
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Anyway many authors have developed
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Either they consist on interest or
Page 59 and 60: (a) Economies of scale in the deten
Page 61 and 62: Type of Risk Analyze the Risk Evalu
Page 63 and 64: They may have originated an investm
Page 65 and 66: I. PRESENTATION OF THE ANALYSIS MOD
Page 67 and 68: II. DATA COLLECTION TOOLS For what
Page 69 and 70: Part II: The Practice of the Cash-
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Page 73 and 74: 8. Development: Currently, this dep
Page 75 and 76: B. Dynamical competition While the
Page 77 and 78: 1.2 - The existence and the importa
Page 79 and 80: December - 2014 0,00 DH 1 599 918,6
Page 81 and 82: (a) Four sources of costs can be id
Page 83 and 84: 20 000 000,00 DH Figure n°5: INFLO
Page 85 and 86: Therefore; when the company realize
Page 87 and 88: implementing rules are poorly known
Page 89 and 90: Regardless of the method chosen, it
Page 91 and 92: date, but whose amount is known (e.
Page 93 and 94: 30% of the Turnover in the fifth pe
Page 95 and 96: OVERDRAFT’S COSTS = [33.000.000 D
Page 97 and 98: 3 ° - The Customer-Loan Control Co
Page 99 and 100: Profitability is the guarantee of t
Page 101 and 102: (b) The Positive Effect. Swelling o
Page 103 and 104: 2.2 - The influence of investment o
Page 105 and 106: There are thus two sets of 12 month
Page 107 and 108: S = The starting stock (possibly) +
Page 109: This chart is reserved to make clea
Page 113 and 114: 50% is paid to the supplier 14 days
Page 115 and 116: Figure n°18: Daly Balance of IWACO
Page 117 and 118: Regarding the previous chapters, an
Page 119 and 120: THE CONCLUSION Page 119 of 124
Page 121 and 122: Investment and its financing, Trai
Page 123 and 124: BOOKS: http://tel.archives-ouverte
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Optimization of the company's cash flow

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