The Miller Orr model * A more realistic alternative for Baumol model for cash management. This model deals with managing daily cash. Miller-Orr says that daily cash flow deviation can be affected by the daily transaction cost, variance of cash flows and interest rates. Therefore, the spread formula is created to mean fluctuation. Lower limit (minimum cash balance) and upper limit (maximum cash balance) will be set and the spread causes the difference between lower limit and upper limit. In other
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799132 | 639407 | 683037 | 746491 | 717016 | 3.) Baumol Model assumes that the cash inflow is constant. Both equations find the optimal cash balance, but the Miller-Orr model goes a step further and finds the average cash balance. Miller-Orr gives a more accurate depiction of the optimal cash balance because it takes into account the upper and lower limits for the cash balance. A substitute for the baumol model could be the EOQ model because it finds a better target cash balance. 4.) If it
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799132 | 639407 | 683037 | 746491 | 717016 | 3.) Baumol Model assumes that the cash inflow is constant. Both equations find the optimal cash balance, but the Miller-Orr model goes a step further and finds the average cash balance. Miller-Orr gives a more accurate depiction of the optimal cash balance because it takes into account the upper and lower limits for the cash balance. A substitute for the baumol model could be the EOQ model because it finds a better target cash balance. 4.) If it
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Holding Cash l l l The Baumol Model The Miller-Orr Model Other Factors Influencing the Target Cash Balance Costs in dollars of holding cash Total cost of holding cash Opportunity Costs Trading costs C* 2 Size of cash balance 3 The Baumol Model – Opportunity Cost F = The fixed cost of selling securities to raise cash T = The total amount of new cash needed K = The opportunity cost of holding cash: this is the interest rate. The Baumol Model – Trading Cost F = The fixed cost
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1. Discuss the working capital management? Working capital management Working capital management refers to the administration of current assets and current liabilities. Liquidity management involves the planned acquisition and use of liquid resources over time to meet cash obligations as they become due. The firm’s liquidity is measured by liquidity ratio such as current ratio, quick ratio, cash ratio. Financing current asset Current Assets require financing by use of either current funds or
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The first theories to hold cash is to avoid the cost of being short liquid assets (Baumol, 1952) (Tobin, 1956) (Meltzer, 1963) (Miller and Orr, 1966) and Karni (1973). Besides the fact that the cash-to-assets ratio for U.S. firms almost doubled (Bates, Kahle & Stulz, 2009) we think that U.S. firms do not hold too much cash. Firms hold cash for different motives. According to Keynes (1936) these motives are: a transaction motive, precautionary motive and speculative motive. Based upon these three
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BAB4 | PENGELOLAANKAS | | A. ALIRAN KAS DALAM PERUSAHAAN Setiap perusahaan dalam menjalankan usahanya selalu membutuhkan uang tunai atau kas. Kas diperlukan baik untuk membiayai operasi perusahaan sehari-hari seperti pembelian bahan baku, pembayaran upah, pembayaran hutang, atau pembayaran-pembyaran tunai lainnya, serta dibutuhkan untuk investasi pada aktiva tetap. Pengeluaran kas ada yang bersifat kontinyu seperti untuk pengeluaran-pengeluaran rutin dan ada pula yang bersifat intermitten
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Improving Local Health Care Demetrice Armwood Harold Griffin, Ph.D. HSA 520 – Health Information Systems February 28, 2013 Improving healthcare at the local level is a very slow process. With all the new technology that has evolved, it has yet to reach the smaller practices and clinics on the local level. New technology has been created to eliminate the problems associated with accessing patient medical records, duplicating services, data organization, order entry
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3 marks: 1. What is current assets policy? State the policies related to current asstes management. 2. State the matching approach concept of working capital policy. 3. What do you understand by the cost trade-off? 4. State the difference between pledge and mortgage? 5. What is optimal conversion size/amount? 6. What are short costs? 7. what is cash cycle? 8. State the difference between bank overdraft and cash credit. 9. Briefly explain the modes of security of bank financing. 7 marks:
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An Assessment of Corporate Cash Management Practices Author(s): Lawrence J. Gitman, Edward A. Moses and I. Thomas White Source: Financial Management, Vol. 8, No. 1 (Spring, 1979), pp. 32-41 Published by: Wiley on behalf of the Financial Management Association International Stable URL: http://www.jstor.org/stable/3665408 Accessed: 26-04-2016 11:33 UTC Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at http://about.jstor.org/terms JSTOR is a not-for-profit
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