Optmization of Treasury

The advantage of this method is to explain the causes of variation in cash which are to be found in the Working
Capital Fund, themselves conditioned by changes in the operation of the undertaking.
3.2.1 - PRESENTATION OF THE CASH FLOW FORECAST IN TERMS OF 'RESOURCES AND NEEDS'.
Short-term cash forecasts are generally presented in one of the three following forms:
Estimated Balance
Adjusted earnings
Variation of working capital.
These three possible presentations use the same forward-looking information; either variation estimated.
G = gross fixed assets,
S = stocks,
R = realizable customers (third party receivables and short term loans).
C = cash,
Cp = capital permanent (capital, reserves and long-term loans),
D = depreciation,
ST = short-term debt (third-party accounts payable and short-term borrowings),
F = profits,
1 – ESTIMATE:
i.e., the estimate and the projected income statement data
The presentation takes the following form:
Or, what amounts to the same,
G + S + R + C = Cp + D + ST + F
(G - D) + S + R + C = Cp + ST + f
Should be to estimate as accurately as possible the movements of each workstation for the next (month or year)
period. The Cash is obtained by difference.
2 - ADJUSTED INCOME:
The relationship becomes:
3 - The variation of the Working Capital Fund.
This time the relationship is written:
And highlights the change in working capital:
C = F + D + ST + Cp - (G + S + R)
C = F + D + Cp - G - (S + R - ST)
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