ADMS 4541 Lecture Notes - Lecture 4: Credit Analysis, Stockout, Negative Number

• School: York University
• Department: Administrative Studies
• Course: ADMS 4541
• Professor: Yogendra Acharya

Document Summary

Baumal model assumes that cash needs are known, cash inflows are lumpy (very irregular), and that transaction costs and opportunity costs are fixed. Put the baumol model formula in the formula sheet. Miller-orr model relaxes the baumal model"s assumption of non-cash loans and implements the concept of control limits. The stone model gives the manager the ability to incorporate known certain cash flows into the planning process. Firms often limit the maturity of short-term investments to 90 days to avoid loss of principal due to changing interest rates. Avoid investing in marketable securities to r. Granting credit increases sales (sales volume goes up) Credit management examines the trade-off between increased sales and cost of granting credits. Distinguishing between good" customers that will pay and bad" customers that will default. Of the 5 c"s character is the most important part ** will be in the exam.