The document discusses two cash flow models:
(1) The Baumol model treats cash as inventory and determines the optimal amount and timing of cash transactions in a predictable environment.
(2) The Miller-Orr model seeks to overcome the Baumol model's limitations by accounting for unpredictable cash flows and establishing upper and lower cash limits. An example applies the Miller-Orr model to determine optimal cash levels for a company. Effective cash modeling can help large businesses and small businesses optimize their cash resources but businesses must balance modeling with actual cash flows.
Explain the concept of financial leverage.
Discuss the alternative measures of financial leverage.
Understand the risk and return implications of financial leverage.
Analyse the combined effect of financial and operating leverage.
Highlight the difference between operating risk and financial risk.
Explain the concept of financial leverage.
Discuss the alternative measures of financial leverage.
Understand the risk and return implications of financial leverage.
Analyse the combined effect of financial and operating leverage.
Highlight the difference between operating risk and financial risk.
Explain the general concept of opportunity cost of capital.
Distinguish between the project cost of capital and the firm’s cost of capital.
Learn about the methods of calculating component cost of capital and the weighted average cost of capital.
Understand the concept and calculation of the marginal cost of capital.
Recognise the need for calculating cost of capital for divisions.
Understand the methodology of determining the divisional beta and divisional cost of capital.
Illustrate the cost of capital calculation for a real company.
Risk and Return: An Overview of Capital Market Theory PANKAJ PANDEY
Discuss the concepts of average and expected rates of return.
Define and measure risk for individual assets.
Show the steps in the calculation of standard deviation and variance of returns.
Explain the concept of normal distribution and the importance of standard deviation.
Compute historical average return of securities and market premium.
Determine the relationship between risk and return.
Highlight the difference between relevant and irrelevant risks.
Marina and Village Surface Water Runoff and Waste Water Management planFrank Costanzo Connelly
Executive Summary and System Recommendations for the Sanctuary Belize Marina and Village Surface Water and Waste Water Management Plan designed to suit and meet required levels of protection and mitigation per the Dept of Environment of Belize Environmental Compliance Plan (submitted and approved) and to meet international standard per UNEP Caribbean Special Protected Areas and Wildlife Act for which Belize is signatory. Areas include mixed residential WWT, land and sea fuel station systems and process, monitoring and protocol
My marina research trip to Cuba. Seven Days in a Cuban Hospital repairing a fractured hip. Still had meetings from my hospital bed and my assistant CiCi got some great pictures
Explain the general concept of opportunity cost of capital.
Distinguish between the project cost of capital and the firm’s cost of capital.
Learn about the methods of calculating component cost of capital and the weighted average cost of capital.
Understand the concept and calculation of the marginal cost of capital.
Recognise the need for calculating cost of capital for divisions.
Understand the methodology of determining the divisional beta and divisional cost of capital.
Illustrate the cost of capital calculation for a real company.
Risk and Return: An Overview of Capital Market Theory PANKAJ PANDEY
Discuss the concepts of average and expected rates of return.
Define and measure risk for individual assets.
Show the steps in the calculation of standard deviation and variance of returns.
Explain the concept of normal distribution and the importance of standard deviation.
Compute historical average return of securities and market premium.
Determine the relationship between risk and return.
Highlight the difference between relevant and irrelevant risks.
Marina and Village Surface Water Runoff and Waste Water Management planFrank Costanzo Connelly
Executive Summary and System Recommendations for the Sanctuary Belize Marina and Village Surface Water and Waste Water Management Plan designed to suit and meet required levels of protection and mitigation per the Dept of Environment of Belize Environmental Compliance Plan (submitted and approved) and to meet international standard per UNEP Caribbean Special Protected Areas and Wildlife Act for which Belize is signatory. Areas include mixed residential WWT, land and sea fuel station systems and process, monitoring and protocol
My marina research trip to Cuba. Seven Days in a Cuban Hospital repairing a fractured hip. Still had meetings from my hospital bed and my assistant CiCi got some great pictures
Developing best management practices for marinas and waterfront 1 25-11Mario Cruz
A Presentation giving at the International Marine and Boat Conference in 2011 to help Marinas meet environmental goals and help achieve a "Clean Marina" status.
spillcontainment.com
This presentation will assist marina managers and owners create an effective strategic marketing plan.
However, it can be used as a model for creating a marketing plan for any product or service.
This is an in-depth presentation on the marina business for those interested in owning and operating a marina business. It is also very informative for those wanting to sell or buy a marina. More info can be found on my website www.rgassoc.com.
Transboundary flood management in a changing environment
International Roundtable on Protection and Sustainable Use of Trans-boundary Waters in South East Europe, 15-16 December 2011, Zagreb, Croatia
Content Curation Scorecard for Content Marketing SuccessRoger Parker
Roger C. Parker's Content Curation Scorecard helps content marketers evaluate their content curation efforts in 10 important areas. Use this scorecard to make sure that you are providing helpful, relevant information on a consistent basis.
Regular use of the Content Curation Scorecard provides a fresh perspective, identifying areas of excellence as well as areas requiring attention.
If you want your content marketing to take your business closer to its goals, it helps to have a game plan – a strategic selection of plays you can rely on to help you beat the competition and score points with your target audience. Each year, our Benchmarks, Budgets, and Trends research reveals which tactics marketers are currently using. And while it’s clear that certain platforms and plays are likely to cycle in and out of popularity over time, we’ve noticed an alarmingly consistent trend that seems to impact nearly all of them: Content marketers are experiencing a large gap between using a tactic and getting effective results from it. Our newest Playbook aims to help all content marketers better understand the value proposition of content marketing tactics and achieve greater success with their efforts.
Here is all about what you seek on Working Capital Management.類類
Wide Areas about : Introduction,Meaning,Definition,Components,Factors influencing,
Working Capital management: Cash management(, Inventory management, Receivables Management, Inventory management and about factoring.
21st century has been defined by application of and advancement in information technology. Information technology has become an integral part of our daily life. According to Information Technology Association of America, information technology is defined as “the study, design, development, application, implementation, support or management of computer-based information systems.”
Information technology has served as a big change agent in different aspect of business and society. It has proven game changer in resolving economic and social issues.
Advancement and application of information technology are ever changing.
cash management
Strategies for cash management
Projection of cash flows and planning
Determining optimal level of cash holding in the company
(EOQ) to cash management
a) (Economic Order Quantity) to cash management
b) Stochastic model
c) Probability model
Miller and Orr model
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Buy Verified PayPal Account | Buy Google 5 Star Reviewsusawebmarket
Buy Verified PayPal Account
Looking to buy verified PayPal accounts? Discover 7 expert tips for safely purchasing a verified PayPal account in 2024. Ensure security and reliability for your transactions.
PayPal Services Features-
🟢 Email Access
🟢 Bank Added
🟢 Card Verified
🟢 Full SSN Provided
🟢 Phone Number Access
🟢 Driving License Copy
🟢 Fasted Delivery
Client Satisfaction is Our First priority. Our services is very appropriate to buy. We assume that the first-rate way to purchase our offerings is to order on the website. If you have any worry in our cooperation usually You can order us on Skype or Telegram.
24/7 Hours Reply/Please Contact
usawebmarketEmail: support@usawebmarket.com
Skype: usawebmarket
Telegram: @usawebmarket
WhatsApp: +1(218) 203-5951
USA WEB MARKET is the Best Verified PayPal, Payoneer, Cash App, Skrill, Neteller, Stripe Account and SEO, SMM Service provider.100%Satisfection granted.100% replacement Granted.
As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
➢ SUPER JUNIOR-L.S.S. THE SHOW : Th3ee Guys in HO CHI MINH
➢FreenBecky 1st Fan Meeting in Vietnam
➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
1. BAYSHORE MANAGEMENT PARTNERS
192 Marina Drive, Long Beach, CA 90803
P: 562-427-4371 F: 562-430-0712
howard@bayshorepartners.org
Cash Flow Part 12 – Cash Models
By Howard Fletcher
November 30, 2007
Modeling can also be useful in predicting the optimal amount of cash on hand to maximize cash
flow and minimize interest expense. The most common models are the Baumol cash model and
Miller-Orr cash model.
Baumol Model
Developed by William Baumol it is a derivative of the EOQ model. It is used to determine the
optimal amount of cash to hold in a predictable environment. It treats cash as inventory and
buying and selling investment transactions as ordering costs. The objective is to minimize the
fixed cost of buying and selling investment transactions and minimize the opportunity cost of
holding too much cash. Just like in EOQ Baumol is a two-step formula. Step one is to determine
the optimal transaction size. Step two is to determine the optimal number of transactions in a
period. Average cash holdings would be one half of the optimal transaction size.
Baumol formula is same as the EOQ formula except transaction cost is substituted for order cost
and interest cost is substituted for carry cost. The formula is:
Z = √2NF / i
Where:
Z = the zero point to which the cash balance returns (the EOQ)
N = the annual cash need (the usage rate, S)
F = the fixed cost of each cash-securities transaction (the order cost, O)
i = the annual interest rate on marketable securities
The Baumol model can be depicted by the graph on the following page. The amount of cash to
be held is that point where the combined cost of cash transactions and the opportunity cost of
holding cash are the least.
2. BAYSHORE MANAGEMENT PARTNERS
192 Marina Drive, Long Beach, CA 90803
P: 562-427-4371 F: 562-430-0712
howard@bayshorepartners.org
As with the EOQ model, the average amount of cash to be held and the frequency of securities
transactions can be depicted in a graph as shown below. Should the company have an unexpected
need for cash it will have to sell securities to raise cash earlier than it anticipated. An example
shows how the formula works.
Example
A company has $5,000,000 per year in total cash disbursements. It costs $75 on average every
time securities are sold for cash. Calculate the Zero point, the number of transfers each year, the
frequency of transfers and the average cash holdings, if the current short term investment rate is
5%.
Zero point = Z = √2NF / I = √2 x 5,000,000 x 75 / .05 = √15,000,000 = $38,730 (max cash)
Number of transfers per year = N/Z = 5,000,000 / 38,730 = 129 transfers
Transfer frequency = 360/number of transfers = 360 / 129 = 2.8 days
Average cash balance = Z/2 = 38,730 / 2 = $19,365
In this case the company would replenish cash from securities approximately once every 3 days
with each transaction being $38,730.
Baumol represents a good first try to the cash holdings problem. It is easy to use and understand.
It is useful when cash in and out is constant and predictable. But it suffers from some
shortcomings. It relies on a constant cash flow which is unrealistic. It ignores the possibility of
accumulating excess cash. Transaction costs are not always fixed.
Miller-Orr Model
This model seeks to overcome the shortcomings of the Baumol model. It determines the optimal
amount of cash to hold in an unpredictable environment. It extends the Baumol model in that it
tracks both inflows and outflows of cash, allows inflows and outflows on an irregular and
3. BAYSHORE MANAGEMENT PARTNERS
192 Marina Drive, Long Beach, CA 90803
P: 562-427-4371 F: 562-430-0712
howard@bayshorepartners.org
unpredictable basis and establishes two trigger points - the lower cash level at which securities
must be sold to replenish cash and the upper cash level at which surplus cash should be invested.
Miller-Orr is not concerned with the frequency of the securities transactions. It is trying to
determine the optimal time to buy or sell securities based on the amount of cash on hand. Miller-
Orr takes into consideration the fixed cost of securities transactions and assumes these costs are
the same when both buying and selling, the daily interest rate on marketable securities and the
variance of the daily net cash flows. The formula is:
Z = 3√3F∆2/4i +LCL
Where:
Z = Zero Point – the cash balance return point
F = Fixed cost of each securities transaction
i = Interest rate per day on marketable securities
∆2 = Statistical variability of the net daily cash flow
LCL = Lower cash limit (established by management)
The upper cash limit, or UCL, is established by the formula
UCL = 3Z – 2(LCL)
The average cash balance is established by the formula
(4Z – LCL) / 3
The Miller-Orr model can be depicted by the following graph:
4. BAYSHORE MANAGEMENT PARTNERS
192 Marina Drive, Long Beach, CA 90803
P: 562-427-4371 F: 562-430-0712
howard@bayshorepartners.org
Example
A company has $5,000,000 per year in total cash disbursements. It costs $75 on average every
time securities are sold for cash. The cash manager estimates that the variance of change in the
daily cash flow balance is $200,000. He also establishes that the lower cash limit is $5,000.
Calculate the Zero point, the upper cash limit and the average cash balance if the current short
term investment rate is 5%.
Answer:
I = .05/365
= .000137
LCL = $5,000
Z = 3√3F∆2/4i + LCL
= 3√(3 x 75 x 2,000,000) / (4 x.000137) + 5,000
= 3√(8.21168E+15) + 5,000
= 20,175 + 5,000
= $25,175
UCL = 3Z – (2 x 5,000)
= 75,525 – 10,000
= $65,525
Average cash balance = (4Z – 5,000) / 3
= 95,700 / 3
= $31,900
The upper cash limit, or that point where the company buys securities with cash over and above
that amount, is $65,525. The lower cash limit set by management is $5,000 at which point the
company sells securities to raise cash. The average cash balance is $31,900.
Effective modeling is not essential to any company seeking optimal utilization of its cash
resources but it can help if used properly. It is particularly useful to large and rapidly growing
companies that have complex cash management requirements. It can also be useful to small
companies which are cash constrained. However business owners must be careful not to lose
touch with actual day to day cash flow challenges for the sake of modeling. One could model
oneself right out of business.
Howard Fletcher is the principal owner of Bayshore Management Partners. As an author, speaker,
consultant and mentor, Mr. Fletcher has helped many senior executives and business owners
reinvigorate their personal growth, increase their self-satisfaction, improve their quality of life and take
their businesses to new levels of success. Mr. Fletcher has been CEO of four companies, COO of three
others, consultant to others and the owner of a small manufacturing company. He has been a senior
executive of a major international corporation and non-executive director of numerous for-profit and not-
for-profit organizations. He is a founding partner of Stronghold Capital Partners, a private intermediary
based in Scottsdale, Arizona. Mr. Fletcher has lived, worked and traveled extensively overseas as a
5. BAYSHORE MANAGEMENT PARTNERS
192 Marina Drive, Long Beach, CA 90803
P: 562-427-4371 F: 562-430-0712
howard@bayshorepartners.org
corporate finance professional and he is a keen observer of global political, economic and financial
trends. Mr. Fletcher has a Masters Degree in International Management and a Bachelors Degree in
Finance, both from the University of Southern California. He is also a graduate of the Stanford University
Executive Management Program. He is an Accredited Associate of the Institute for Independent Business
and he holds four active securities licenses.