Explain the Miller and Orr Model of Cash Management?

Question

18 Apr 2024

Answer :

Word Count : 552

The Miller and Orr Model of Cash Management, devised by Merton Miller and Daniel Orr in the 1960s, is a pioneering framework used by businesses to optimize their cash management processes. In essence, it provides a systematic approach for determining the optimal level of cash balance that a company should maintain to minimize costs associated with holding excess cash while ensuring that it has enough liquidity to meet its obligations.

At its core, the Miller and Orr Model is based on the principle of the "target cash balance." This represents the ideal _______ _________ _______ ____ ________ ______ _________ ________ _______ ___.
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