A system dynamics model for corporate financial planning and policy design | |
| Author | Enriquez, Ramon Hojas |
| Call Number | AIT Thesis no.IE-81-06 |
| Subject(s) | Industrial management Finance--Mathematical models |
| Note | A thesis submitted in partial fulfillment of the requirements for the degree of Master of Engineering. School of Engineering and Technology |
| Publisher | Asian Institute of Technology |
| Abstract | This Thesis attempts to apply the System Dynamics methodology to the financial aspects of corporate planning and policy design. A model of the financial system of a firm was built, taking into account the influence of sales on the system, the interaction between the short and long-term financing needs of the company, and the interaction between the company and its external sources of financing. It was written in the DYNAMO language and the corresponding structures were based on standard accounting identities, funds flow relationships and on perceived relationships gained from interviews, experiences and literature. The model was used to investigate the impacts of various policies that concern sales level, debt capacity and dividend payouts, on the firm's performance. An attempt was also made to predict the financing needs and the corresponding financing schemes of the firm - given a certain scenario. The model can also provide sufficient information on which proforma financial statements can easily be constructed. Based on the results of simulation runs conducted on the model, it is always desirable from both the management and shareholders point of view for the particular firm being studied to grow (in terms of sales) as fast as possible. Stagnation of sales growth leads to a deterioration of the firm's shareprice. Debt financing which is usually considered as profitable, should be implemented with caution as heavy reliance on debts increases interest payments, thereby reducing earnings. It is also desirable to minimize dividend payout as much as practicable. The above-mentioned applications will in no way restrict its usefulness to other problem areas of financial management. However, the power of the model and of the methodology in general, still remains in policy design. |
| Year | 1981 |
| Type | Thesis |
| School | School of Engineering and Technology |
| Department | Department of Industrial Systems Engineering (DISE) |
| Academic Program/FoS | Industrial Engineering (IE) |
| Chairperson(s) | Clarke Harry R. |
| Examination Committee(s) | Tabucanon, Mario T. ; Saeed, Khalid |
| Scholarship Donor(s) | The Government of Japan |
| Degree | Thesis (M.Eng.) - Asian Institute of Technology, 1981 |