Financial Management-Components of Working Capital [IAS (Admin.) Mains Commerce Accountancy]: Questions 1 - 2 of 2

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Question 1

Describe in Detail Subjective▾

‘’ It is seen that a financial manager always tries to synchronise the cash inflows and cash outflows . But the situation is seldom found in the real world . Perfect synchronisation of receipts and payment of cash is only an ideal situation . ‘’ In the light of this statement Explain the Nature of cash. Also throw light on the motives for holding Cash.

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Explanation

Cash

  • Cash is one of current assets of a business. It includes cash in hand, cash at bank and sometimes marketable securities are also considered to be part of cash as these are securities which can easily be converted into cash.
  • Cash itself does not produce goods or services. It is used as a medium to acquire other assets.
  • A business has to keep requi…

… (437 more words, 6 figures) …

Question 2

Appeared in Year: 2020

Describe in Detail Subjective▾

Explain how with managerial intervention cash balance is maintained within limits using Miller and Orr Model. (Paper-I)

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Explanation

The Miller and Orr Model is a cash management model developed by economists Merton Miller and Daniel Orr in 1966. The model provides a framework for determining the optimal level of cash balance that a company should maintain to minimize the costs of cash management.

The Miller and Orr Model assumes that a company՚s cash balance fluctuates randomly …

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