2.  The term cash not
only includes coin,
currency notes,
cheques, bank draft,
demand deposits, with
banks but also the
cash assets like
marketable securities
& time deposits with
bank because they can
readily be converted
into cash.
CASH
Narrow Sense
Cash in hand
i.e. currency
notes & coins
Broad Sense
Cash & its
equipment i.e.
cash at bank,
short term
investment

3.  Although cash is only 1-3% of total current
assets but its management is very important.
 Management of cash includes:
a. Determination of optimum amount of cash
required in the business.
b. To keep the cash balance at optimum level
and investment of surplus cash in profitable
manner.
c. Prompt collection of cash from receivables
& efficient disbursement of cash

4.  Cash management is concerned with the
managing of:
 cash flows into and out of the firm,
 cash flows within the firm, and
 cash balances held by the firm at a point of time
by financing deficit or investing surplus cash

5.  Cash planning
 Optimum cash level
 Managing the cash flows
 Investing surplus cash

6.  Cash management is a broad term that
covers a number of functions that help
individuals and businesses process receipts
and payments in an organized and efficient
manner

7.  (a) Transaction Motive
 (b) Precautionary motive
 (c) Speculative motive and
 (d) Compensating Motive.

8.  This motive refers to the holding of cash in
order to meet the day-to-day expenses of the
business. These transactions including
purchase of raw material, packing materials,
wages, operating expenses, taxes, dividend
etc

9.  This motive for holding cash refers to
maintaining a cash balance to meet
unexpected contingencies, which may arise
as a result of
 - Uncontrollable circumstances, such as
floods, strikes, earthquakes etc.
 - Sharp increase in the cost of materials,
labor etc.
 - Unexpected delay in collection of accounts
receivables.

10.  It refers to the desire of a firm to keep cash
to take advantage of profitable
opportunities, which are outside the normal
course of business. It helps to take advantage
of
 - Purchasing raw materials at reduced prices
by availing the benefits of cash discount.
 - Speculating on interest rate movements
etc.

11.  Banks provide different types of services to
the firms, e.g. clearance of cheque, transfer
of funds etc. against a nominal fee or
commission. Generally, clients (firms) are
required to maintain a minimum cash
balance at the bank which cannot be utilized
by them for transaction purpose. The bank
can use the same for generating returns

12.  All businesses, no matter what type or size,
need to properly develop a plan for their
expected cash intake and spending. This plan
is commonly known as a cash budget, and it
can be prepared quarterly or annually.

13.  The cash budget determines your future
ability to pay debts as well as expenses.
 cash budget helps pinpoint estimated cash
balances at the end of each month which
may foresee short-term cash shortfalls.

14.  How quickly and cheaply a organization
can raise cash when needed.
 How accurately managers can predict
cash requirements.
 (Cash Budget helpful)
 How much precautionary cash the
managers need for emergencies.

15.  Available (short-term) investment
opportunities
 e.g. money market funds, CDs, commercial
paper
 Expected return on investment
opportunities.
 e.g. If expected returns are high, organizations
should be quick to invest excess cash
 Transaction cost of withdrawing cash and
making an investment
 Demand for Cash for daily transactions
 (Cash Budget helpful)

16.  Enough cash to make payments when
needed. (transactions motive)
 (Daily or Weekly Cash Budget helpful)
 Additional cash may be held for unexpected
requirements. (precautionary motive)