A linear programming model for cash flow management in the Brazilian construction industry

Payment in the Malaysian construction industry has generally been an issue of concern. Late and non-payment problem is endemic in construction and needs to be addressed. The aim of this study is to investigate the issues related to late and non-payment based on the building materials suppliers’ perspective. Questionnaires were distributed to suppliers of building materials in the Klang Valley. Findings from the study shows the main cause of late and non-payment is the paymaster’s poor financial management while the main effect of late and non-payment is problem with the cash flow. The most recommended possible solution to cope with the issue is for the paymaster to conduct training on financial and cash flow management to the management team in the company.

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Optimization of profitability and liquidity for residential projects under debt and equity financing

Built Environment Project and Asset Management ◽

10.1108/bepam-01-2020-0016 ◽

2021 ◽

Vol 11 (2) ◽

pp. 369-391

Author(s):

Emre Cevikcan ◽

Yildiz Kose

Keyword(s):

Linear Programming ◽

Experimental Design ◽

Cash Flow ◽

Programming Model ◽

Payback Period ◽

Linear Programming Model ◽

Project Financing ◽

Equity Financing ◽

Content Type ◽

Space Allocation

PurposeAn appropriate space allocation among different residence types gives higher profitability and liquidity for cash flow management in real estate projects for developers. Thereby, a balance between debt and equity should be kept for capital formation in developers where high level of cost, profit and risk exists. The purpose of this paper is to provide cash flow optimization under debt and equity financing while providing an appropriate space allocation of residence types via synchronous consideration of profitability and liquidity.Design/methodology/approachA novel optimization methodology that includes project financing, optimization and experimental design modules is proposed. The first module, project financing, considers the flexibility of utilizing one or both of debt financing and equity financing when making capital. The optimization module addresses space allocation among different residence types for a construction while maximizing profitability and liquidity using two mixed-integer linear programming models in a pre-emptive manner. The experimental design module assesses the effects of decisive parameters within the methodology via multivariate analysis of variance (MANOVA).FindingsThe proposed methodology is applied to a real-life residential project in Istanbul. The optimization module yielded 42.5% profitability via the first linear programming model and 2.2% trade-off between liquidity and profitability while minimizing the payback period by the second linear programming model. Meanwhile, MANOVA results showed that profit per square meter and sale rate trends are the most prominent factors considering their significant effects on net present value and payback period.Originality/valueTo the best knowledge of the author, related papers focused only on profitability under equity financing. Liquidity (as an objective) and equity financing (as a financing method) have not been handled. Hence, this paper not only performs profitability and liquidity-oriented cash flow optimization under debt and equity financing but also optimizes space allocation of residences for the first time.

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INSTRUMENTS FOR CASH FLOW MANAGEMENT OF CONSTRUCTION ENTERPRISES

Economic Analysis ◽

10.35774/econa2020.01.02.223 ◽

2020 ◽

pp. 223-229

Author(s):

Mariya Nashkerska ◽

Nataliia Patriki

Keyword(s):

Construction Industry ◽

Cash Flow ◽

Financial Stability ◽

Cash Flows ◽

Flow Management ◽

Construction Enterprise ◽

Cash Flow Management ◽

Construction Enterprises ◽

Payment Schedule ◽

Definition Of

Introduction. Financial state of the construction enterprise, level of its financial stability, creditworthiness and liquidity depend on the availability of current assets, net cash flow (positive or negative), which is formed in the course of conducting payment transactions. The subject of the research is the flow of money of the construction enterprise. The research objectives: identifying the causes of current assets constraints at the construction industry enterprises; using projected cash flow budget and payment schedule as instruments of managing the enterprise cash flow. The purpose of the article is to determine the instruments for cash flow management of construction enterprises, taking into account the peculiarities of their activities. Method (methodology). The article suggests developing projected cash flow budgets and payment schedule to manage cash flows more efficiently (prevent negative net cash flow) based on estimates made by construction enterprises to determine the construction cost. The purpose of the payment schedule is to determine the flow of funds for the next day and the current week as a supplement and detailing of the projected cash flow budget. Research results. The use of the projected cash flow budget and payment schedule at the construction industry enterprises will help the management team to control the incoming and outgoing cash flows, form the data base for making decisions on the efficient use of funds. It will also promote the search for additional funding sources of the enterprise activity in the period of budget deficit as well as pre-justified investment of capital in the period of budgetary surplus Thus, the formation of projected cash flow budgets and payment schedule can be an important instrument for efficient cash flow management of construction enterprises. The method of formation of mutually agreed forecast budget of cash flow and payment calendar with definition of indicators of their efficiency in management of cash flows and a financial condition of the enterprise as a whole needs further improvement. The technique of forming mutually agreed projected cash flow budget and payment schedule along with the definition of their efficiency indicators in managing cash flows and the overall enterprise financial state requires further improvement.

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Organizing the cash flow management in the construction industry in the Russian Federation

IOP Conference Series Materials Science and Engineering ◽

10.1088/1757-899x/862/4/042035 ◽

2020 ◽

Vol 862 ◽

pp. 042035

Author(s):

К V Ketova ◽

I G Rusyak ◽

E V Kasatkina ◽

E A Saburova ◽

D D Vavilova

Keyword(s):

Construction Industry ◽

Cash Flow ◽

Russian Federation ◽

Flow Management ◽

Cash Flow Management ◽

The Russian Federation

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A Linear Programming Model for Product Mix Profit Maximization in A Small Medium Enterprise Company

International Journal of Industrial Management ◽

10.15282/ijim6120205330 ◽

2020 ◽

Vol 6 (1) ◽

Author(s):

S Mohd Baki ◽

Jack Kie Cheng

Keyword(s):

Linear Programming ◽

Production Planning ◽

Business Performance ◽

Programming Model ◽

Profit Maximization ◽

Optimal Level ◽

Linear Programming Model ◽

Product Mix ◽

Small Medium Enterprises ◽

Medium Enterprises

Production planning is often challenging for small medium enterprises (SMEs) company. Most of the SMEs are having difficulty in determining the optimal level of the production output which can affect their business performance. Product mix optimization is one of the main key for production planning. Many company have used linear programming model in determining the optimal combination of various products that need to be produced in order to maximize profit. Thus, this study aims for profit maximization of a SME company in Malaysia by using linear programming model. The purposes of this study are to identify the current process in the production line and to formulate a linear programming model that would suggest a viable product mix to ensure optimum profitability for the company. ABC Sdn Bhd is selected as a case study company for product mix profit maximization study. Some conclusive observations have been drawn and recommendations have been suggested. This study will provide the company and other companies, particularly in Malaysia, an exposure of linear programming method in making decisions to determine the maximum profit for different product mix.

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