A Case Study of Business Cost Financing Using Linear Programming

• Main Authors: Yi-Yin Lin, 林怡吟
• Other Authors: Chang-Chou Chiang
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/19380142087945878877

碩士 === 中原大學 === 國際貿易研究所 === 99 === Enterprises need sufficient working capital to cope with expenses. If there is not enough working capital to cope with the expenses, enterprises would most likely fill in the capital gap by means of financing. Therefore, the supply and demand allocations of the working capital are very closely related to the financing policy. The management of the working capital is also closely related to the success of the enterprises. Currently, most of the medium- and small-sized enterprises adopt the “rule of thumb” for the working capital management. There has not been a programming model to assure an optimal working capital management. In this study, the case company’s assets and liabilities are used to carry out the financing policy. The company’s interest expense is quite large. Thus, a linear programming model is established for the case company to cut the interest expenses. Moreover, the limits and interest rates provided by different banks are applied to ensure that the outcome of the programming is close to reality. The lowest interest expenses are obtained from this programming to allow the allocations of the working capital to be at the optimal level and have the best combinations. Since linear programming has the advantage of flexibility, the financial blueprint can be planned in a short time and be used as the tool in capital allocation and other financial planning decision. The results show that the original interest expense of the case company is about NT$ 34,000,000 while it drops to about NT$ 29,000,000 by way of linear programming. The amount of money saved was NT$5,000,000 which is a 15% reduction from the original interest expense. Therefore, it is seen that, through the linear programming model established in the research, not only the interest expense can be effectively reduced, the financial blueprint can be quickly planned to provide to financial planners for capital allocation.