CP 205 FINANCIAL MANAGEMENT

PRESENTED TO : PROF. R.K.Raul DBA-SMS(AUS)

PRESENTED BY KAILASH KHANDELIA (61)

Cash is one of the current assets of a business. It is needed at all time to keep the business going. Business concern should always keep sufficient amount of cash for meeting its obligations. Any shortage of cash will hamper the operations of a concern and any excess of it will be unproductive.

Cash anagement Is the maintaining of liquidity of a firm to minimize the risk of insolvency. ( y keeping suffient amount of cash to meet its obligation.) ( An insolvent company is one where it is unable to meet its maturing liabilities on time because it has inadequate liquidity to meet its debt obligation)

Cash anagement is also about the proper balancing of keeping cash without letting it idling around. ( ean it maintain proper balance between liquitity and profitability)

Transaction motive Precautionary motive Speculative motive

Maintaining cash for the purpose of meeting cash needs arising in the ordinary course of doing business. Includes regular payments like wages, utilities, acquisition of fixed assets and inventories Amount of cash needed for transaction requirements depends on the nature of business and varies from industry to industry.

Maintaining of cash balance as buffer for UNEXPECTED needs that may arise. (Mainintaing a suffucuent amount of cash balance to meet the future unexpected needs.) Either holding in cash or marketable securities that can be liquidated easily

Holding cash for potential profit making situation, because profitable opportunities do not come in a regular manner. E.g. Purchasing raw materials in bulk in anticipation of a fall in price.