1. Baumol Model
◇It is similar as the economic order quantity （EOQ）model
It refers to how much cash should be withdrawn from short-term investment to current account.
◇Ordering cost: transaction cost
◇Holding cost: opportunity cost, loss of interest on short-term investment, holding $1 for one year
2. The attitude of management towards risk
◇Aggressive: finance most current assets, including permanent ones, with short term finance. It is risky but profitable.
◇Conservative: long term finance is used for most current assets, including a proportion of fluctuating current assets. It is stable but expensive.
◇Matching: the duration of the finance is matched to the duration of the investment.
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