Cash in a broader sense includes coins, currency notes, cheques , bank drafts and also marketable securities and time deposits with banks.
Objectives of Cash Management
a) To meet payment needs of trading & business activities.Â
b) To minimize idle funds
c) To avoid cash crunch
d) To maintain liquidity
e) To make payments to creditors and suppliers on time.
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MOTIVES for holding CashÂ
1)     Transaction Motive — for routine business/ operating payments
2)     Precautionary Motive — to provide for unexpected/ unpredictable events like strike, flood, increase in raw material cost etc.
3)     Speculative Motive — to take advantage of unexpected opportunities like favourable/ reduced prices of material , discount for bulk purchases etc.
4)     Compensating Motive — Minimum balance is required to be maintained with the banks for various services  provided by them.
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