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A Note on a Planning Horizon Model of Cash Management

Published online by Cambridge University Press:  19 October 2009

Suresh P. Sethi
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Extract

The problem of cash management, in its simplest form, is to formulate decision rules which control the level of a firm's cash balance to meet its demands for cash at minimum total discounted cost. Control is achieved by transacting securities for cash. The cost of control is the commission expense [13]. Optimality depends on balancing excess opportunity costs of holding balances which are too large and having excess buying and selling costs (to meet cash obligations) of balances which are too small.

Type
Communications
Information
Journal of Financial and Quantitative Analysis , Volume 6 , Issue 1 , January 1971 , pp. 659 - 664
Copyright
Copyright © School of Business Administration, University of Washington 1971

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References

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