SUMMARY
The very objective behind the management of cash is to determine the optimal level of cash holding so that the cost of holding does not mount, and at the same time, it meets the different purposes for which cash is held. The motives behind cash holding are transaction motive, precautionary motive, speculative motive, exploitation of investment opportunities and compensating balance requirements.
The first step in the management of cash is to assess the size of cash requirements for which cash budget is normally prepared. However, the finance manager tries to do with the minimum possible level of cash and to this end he or she accelerates cash collection through reducing negative float and controls the disbursement procedure.
The finance ...
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