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BENEFITS OF DOCUMENT
Financial Management in Cash Management & Inventory Control
1. Setting the target cash balance
2. EOQ model
3. Why is inventory management vital to the financial health of most firms?
4. Total Inventory Costs (TIC)
5. Derive the EOQ model from the total cost equation
6. Can the EOQ be used if there are seasonal variations?
7. The factors affect an EOQ analysis
8. Baumol Model
9. Costs of cash – Holding costs
10. Costs of cash – transactions costs
11. Optimal cash transfer size
Cash management is the process of collecting and managing cash flows. Cash management can be important for both individuals and companies. In business, it is a key component of a company's financial stability.
Theoretical models such as the Baumol model have been developed for use in setting target cash balances. The Baumol model is similar to the EOQ model, which will be discussed later. Today, companies strive for zero cash balances and use borrowings or marketable securities as a reserve. Monte Carlo simulation can be helpful in setting the target cash balance.
Why is inventory management vital to the financial health of most firms?
Insufficient inventories can lead to lost sales.
Excess inventories means higher costs than necessary.
Large inventories, but wrong items leads to both high costs and lost sales.
Inventory management is more closely related to operations than to finance.
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Source: Best Practices in Inventory Management, Financial Management PowerPoint Slides: Financial Management in Cash Management & Inventory Control PowerPoint (PPT) Presentation, UJ Consulting
ABOUT THE AUTHOR: UJ CONSULTING
Untung Juanto ST., MM. Founder of UJ Consulting. He is professionally experienced business and management consultant in several local and multinational companies. [read more] He has an experience in managing an effective and efficient company with various approach methods adapted to different industries because He had a career from the lower management level as Supervisor before finally being at the top management level. His Top Management experience started from the position of General Manager, VP Operation, HR Director and Business Development Director
He completed his undergraduate education majoring in Architecture at Diponegoro University, Semarang, Central Java, Indonesia. After that, He continued to Master of Management level majoring in Human Resource Management with cum laude predicate with a GPA of 3.94 at Mercubuana University, Jakarta, Indonesia.
His last work experience as Deputy President Director at Hutahaean Group in charge of 14 business units engaged in various industries including CPO Production, Oil Palm Plantation, Cassava Plantation, Tapioca flour production, 4 and 5 star hotels, waterparks, golf courses and housing with a total of employees more than 3,000 employees.
His biggest achievement was in 2021 when He served as Deputy President Director at Hutahaean Group Indonesia by increasing the company's revenue from IDR 700 billion to IDR 1.1 trillion (y/y) and increasing the profit margin by more than 20%. Doing a turn around on business units that have lost in the last 5 years become profits. In addition, He have also succeeded in creating an efficient and effective management system by redesigning the Business Process Management (BPM), reviewing Standard Operating Procedures (SOP) and Work Instructions and compiling the appropriate Key Performance Indicator Management (KPIM) to increase employee productivity.
He is currently active as a part-time business and management consultant (online) at Enquire Corp. and Flevy Corp. In addition, He also teach part-time at several universities for courses in strategic management, human resource management, project management, entrepreneurship and business.
UJ Consulting has published 171 additional documents on Flevy.
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