Cash management models

The cash management model also considers the same t planning periods covering the whole time horizon in the strategic SC formulation. This allows an easy integration of both sets of constraints into a unique holistic model. 

They also manage projects for market value added (MVA). The free cash flow model provides the firm value ... 

Monetary institutions and industrial firms alike strive to keep their funds working at all times. Techniques of cash management, such as electronic funds transfer, provide the potential to put to work cash receipts immediately. This has shortened the compounding periods to the point where the use of continuous compounding is the most appropriate cash flow model. In the concept of discrete cash flows with continuous compounding, it is assumed that the cash flows occur once per year but that compounding is continuous throughout the year. Thus, if... 

This portfolio model (Figure 2.8), developed by BCG during the 1960s, is widely used within diversified companies to influence investment and cash management policy. 

Orgler, Y.E., An Unequal-Period Model for Cash Management Decisions , Management Science, Vol. 20, No.lO (October 1970), 1350-1363. 

It is given a set of existing products and a set of potential products. Failure to pass clinical trial implies termination of the development project. The clinical trial for each new product trial has a probability of success, an associated duration and cost, which are assumed to be known. On the SC side, it is assumed that various items of technological equipment are available to be installed in existing and potential facility sites. Regarding the financial area, the formulation endeavors to model cash management and value creation. To calculate corporate value (CV) the discounted-free-cash-flow (DFCF) method is utilized. 

A number of models have been developed to enable managers to handle inventories in the most profitable manner. These models can be applied to other elements of working capital, such as cash. 

An example of a business model innovation is when Dell began selling computers directly to customers, avoiding the retail link in the chain. With minimal inventories to manage, cash up-front from customers, and delayed payment terms to suppliers, Dell redefined working capital management. 

The appropriateness of either model (cash-flow-based versus market value-based) will depend on the asset manager s trading style as well as the particulars of the asset class the asset s market liquidity, duration profile, and credit spread volatility. In terms of mechanics, cash flow arbitrage CDOs are no different than balance sheet CDOs, (again, the only difference being their intended pnrpose and asset sourcing strategy). Consequently, one should see the section on Balance Sheet CDOs for further details. Now, we shift the discussion to market value CDOs. 

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