Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Cash Mgt

2,135 views

Published on

cash management by jim

Cash Mgt

  1. 1. CASH MANAGEMENT MODELS
  2. 2. 2 MODELS <ul><li>Baumol Model </li></ul><ul><li>Miller Orr Model </li></ul>
  3. 3. BAUMOL MODEL <ul><li>Developed by WILLIAM J BAUMOL. </li></ul><ul><li>Carrying cost </li></ul><ul><li>Transaction cost </li></ul>
  4. 4. <ul><li>Formula for calculating Optimum Cash Balance: </li></ul><ul><li>C=√2up/s </li></ul><ul><li>C - Optimum Cash Balance </li></ul><ul><li>u - Annual/ monthly cash requirement </li></ul><ul><li>p - Fixed cost per transaction </li></ul><ul><li>s - Carrying cost </li></ul>
  5. 5. <ul><li>Monthly cash requirement = Rs 60000 </li></ul><ul><li>Fixed cost = Rs 10 </li></ul><ul><li>Interest = 6% p.a. </li></ul><ul><li>Find the Optimum Cash Balance. </li></ul>

×