Optimization of the company's cash flow

C = ax² + bx + c
When the demand and costs are uncertain (introduction of probability distributions relating to the
application and costs);
When the firm decided to stockpile;
When the firm produces two products, or more...
This model, the same interests and the same limitations are attached only to the above. Operationally no decisive
progress was actually performed.
2.2- BANK METHOD OF CALCULATION OF THE WORKING CAPITAL FUND REQUIREMENT.
Having outlined the principles of the method we show its limits.
(a) THE PRINCIPLES OF THE METHOD.
The value of the needs in working capital of a company on a fixed date is equal to the difference between the amount
of its cyclical needs and its cyclic resources:
Working capital needs = cyclical needs - cyclic resources
The difficulty of calculating is, on the one hand, the distinction that must be between the posts at the bottom of the
balance sheet that are directly related to the operating cycle and those who are not, and, secondly, in various
adjustments to made indispensable by the abnormal considered position value. Thus, a post from the bottom of the
balance sheet will be included in the calculation of working capital needs if it has the following characteristics:
-It renews itself cyclically.
-It is related to the operation of the business cycle;
-It corresponds to a normal activity of the company.
In light of these remarks the bottom of the balance sheet is as follows in table n°2:
Table n°2: Company’s composition of balance
NEEDS
I. CYSLICAL NEEDS :
II.
RESSOURCES
CYCLICAL Resources
-Values of operating: normal stock.
-Customers.
-Notes receivable: part not available immediately
(effects to more than 3 months).
-Various and regularization accounts: claims related to
the cycle manufacturing (payments tax, VAT to be
recovered).
-Suppliers and notes payable: share of debts to
suppliers of materials and goods whose duration is
normal.
-Various and regularization accounts: part of the cyclerelated
debts
- Manufacture-sale purchase (provision for tax on
companies, VAT payable, payroll...) whose duration is
normal.
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