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The effects of macroeconomic developments on individual companies' flows of funds

  • Economics


A system of models is described which traces the impact on individual companies' finances of changing the macroeconomic environment. This system comprises models of individual firms integrated with Cambridge's large-scale disaggregated model of the UK economy. Illustrative projections are provided for the period 1980-1988 for three companies under alternative exchange rate and interest rate assumptions; a balance sheet, income appropriation account and funds flow statement is generated for each company-year and each assumption. These case studies illustrate how sensitive companies' finances can be to changes in the macroeconomic environment and also how dissimilar can be the response of different companies' flows of funds to the same macroeconomic change.

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