Finance Numericals

Cash is essential to meet day to day requirement for smoothly running a business. And managing the cash is also necessary because if cash is less than requirement level then company have to borrow the fund which increases the company’s interest paying burden and if more cash is available in comparison to required level in that case the unnecessary cash is acted as wastage for a company. To manage day to day cash and fulfil the requirement of the business Miller Orr Model is used.   In this model the idle cash and the cash level is maintained properly. The below diagram explain the model briefly: In above diagram the vertical line shows cash in rupees and horizontal line shows time period. The L line shows the minimum level or limited level of cash beyond which cash doesn’t go. Or you can say the safety level of company.   The Z line or point shows the target level or return point of cash should be available in a company. The H line shows the excess level of cash available in a comp