Cash Management
Cash is the most liquid asset. It is the most important for the daily operation of the firm. Efficient Management of the cash is very crucial for solvency of the firm. Hence, it is considered as life flood of business organization.
MOTIVES FOR HOLDING CASH
There are 3 important motives for holding cash:
TRANSACTION MOTIVES
Business organization needs cash for conducting business transaction. The collection of cash is not perfectly matched with payments of cash. Hence some cash balance is required to be maintained.
PRECAUTIONARY MOTIVE
There may be uncertainties regarding receipt of cash and payment of cash. In order to protect against such uncertainties, it is necessary to maintain some cash balance.
SPECULATIVE MOTIVE
Business organization would like to tap business opportunities arising from fluctuations from commodity prices, shares prices, foreign exchange rates etc. A firm which has sufficient cash can exploit opportunities.
Cash is the most liquid asset. It is the most important for the daily operation of the firm. Efficient Management of the cash is very crucial for solvency of the firm. Hence, it is considered as life flood of business organization.
MOTIVES FOR HOLDING CASH
There are 3 important motives for holding cash:
TRANSACTION MOTIVES
Business organization needs cash for conducting business transaction. The collection of cash is not perfectly matched with payments of cash. Hence some cash balance is required to be maintained.
PRECAUTIONARY MOTIVE
There may be uncertainties regarding receipt of cash and payment of cash. In order to protect against such uncertainties, it is necessary to maintain some cash balance.
SPECULATIVE MOTIVE
Business organization would like to tap business opportunities arising from fluctuations from commodity prices, shares prices, foreign exchange rates etc. A firm which has sufficient cash can exploit opportunities.