Jamal GMT is a leading garment manufacturing company. The finance manager of the company is expecting that there will be a total need of cash of AED 25,000 over the next 3 months. The company has an opening cash balance of AED 3,000, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is AED 7.00. The interest rate on marketable securities is 12% per annum. There is a constant rate of cash disbursement and no cash receipts during the month. Using Baumol model, suggest the finance manager what should be this company's optimum cash balance. On what theoretical ground, you will argue that the Baumol model provides a good estimate of the optimum cash balance? What other factors you think may influence this company's target cash balance? (10 Marks) Q.2 You are recently appointed by a leading UAE healthcare company. The company is struggling with its liquidity position. Top management of the company wants to hear from you the theoretical viewpoints with regard to accounts payable position in healthcare sector. On a strong theoretical front, you would like to first list down all those activities within the accounts payable domain, that you think will free up cash and strengthen the liquidity position. Discuss those points in detail that you will be submitting to the management. Also suggest a customized strategy for the healthcare sector keeping in mind the best practices. (10 Marks) Jamal GMT is a leading garment manufacturing company. The finance manager of the company is expecting that there will be a total need of cash of AED 25,000 over the next 3 months. The company has an opening cash balance of AED 3,000, and cash is replenished when it hits zero. The fixed cost of selling securities to replenish cash balances is AED 7.00. The interest rate on marketable securities is 12% per annum. There is a constant rate of cash disbursement and no cash receipts during the month. Using Baumol model, suggest the finance manager what should be this company's optimum cash balance. On what theoretical ground, you will argue that the Baumol model provides a good estimate of the optimum cash balance? What other factors you think may influence this company's target cash balance? (10 Marks) Q.2 You are recently appointed by a leading UAE healthcare company. The company is struggling with its liquidity position. Top management of the company wants to hear from you the theoretical viewpoints with regard to accounts payable position in healthcare sector. On a strong theoretical front, you would like to first list down all those activities within the accounts payable domain, that you think will free up cash and strengthen the liquidity position. Discuss those points in detail that you will be submitting to the management. Also suggest a customized strategy for the healthcare sector keeping in mind the best practices. (10 Marks)