One of the most important measures of a firm's performance is its return on assets. This is such a critical metric for businesses, that whole schools of thought have been created around the metric to allow a business to easily control and smooth its working capital costs.
There are actually three recognised models that are at the heart of a cash management exercise and they are loosely referenced as Miller-Orr, The Baumol Model and Stone. They are of course very similar in nature and nothing is unexpected there because the outcome each model is seeking is the same. However, what is curiously interesting about these models is that in part, they appear on the surface to be extension of Fibonacci code model like mentality.
Let's have a bit of fun - click to continue reading