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CASH MANAGEMENT
• Cash Management refers to
optimum utilization of cash to
ensure liquidity and profitability of
business.
• It is thus concerned with the
collection, disbursement and
investment of cash in efficient
manner.
CASH
COINS
NOTES
DEMAND
DEPOSITS
LIQUID
ASSETS
CHEQUES
MOTIVES FOR HOLDING CASH
• TRANSACTION MOTIVE – Cash is required in business to meet
operational expenses like utility bills, salary and wages, travelling
expenses, repair and maintenance, accounting expenses, taxes etc.
• PRECAUTIONARY MOTIVE – Cash is required as provision to meet
unexpected contingencies in shorter period of time.
• SPECULATIVE MOTIVE- Cash should also be kept to grab profitable
opportunities of investment or profit booking as and when the prices are
low or favorable.
OBJECTIVES OF CASH MANAGEMENT
• Optimum cash balance
• Prompt collection from debtor
• Investment of excess cash to
earn profitablity
• Controlling cash inflow and
outflow
• Meeting payment schedule
FUNCTIONS OF CASH MANAGEMENT
1. RECEIVABLES MANAGEMENT
2. INVENTORY MANAGEMENT
3. PAYABLES MANAGEMENT
4. SHORT TERM INVESTMENTS
5. FORECAST & PLANNING
TOOLS FOR CASH CONTROL
• CASH BUDGET - The Cash Budget is a budget prepared to estimate
the cash inflows and outflows during a specific period of time in future.
• CASH FLOW STATEMENT – The Cash Flow Statement is a financial
statement that summarizes the cash inflows and outflows through three
major activities (operating, investing and financing).
• RATIO ANALYSIS – Liquidity ratios like current ratio, quick ratio and
cash ratio measures the financial strength of company in terms cash
and marketable securities available in the company to pay off short
term obligations.
THANK YOU FOR WATCHING

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Cash Management

  • 1.
  • 2. CASH MANAGEMENT • Cash Management refers to optimum utilization of cash to ensure liquidity and profitability of business. • It is thus concerned with the collection, disbursement and investment of cash in efficient manner. CASH COINS NOTES DEMAND DEPOSITS LIQUID ASSETS CHEQUES
  • 3. MOTIVES FOR HOLDING CASH • TRANSACTION MOTIVE – Cash is required in business to meet operational expenses like utility bills, salary and wages, travelling expenses, repair and maintenance, accounting expenses, taxes etc. • PRECAUTIONARY MOTIVE – Cash is required as provision to meet unexpected contingencies in shorter period of time. • SPECULATIVE MOTIVE- Cash should also be kept to grab profitable opportunities of investment or profit booking as and when the prices are low or favorable.
  • 4. OBJECTIVES OF CASH MANAGEMENT • Optimum cash balance • Prompt collection from debtor • Investment of excess cash to earn profitablity • Controlling cash inflow and outflow • Meeting payment schedule
  • 5. FUNCTIONS OF CASH MANAGEMENT 1. RECEIVABLES MANAGEMENT 2. INVENTORY MANAGEMENT 3. PAYABLES MANAGEMENT 4. SHORT TERM INVESTMENTS 5. FORECAST & PLANNING
  • 6. TOOLS FOR CASH CONTROL • CASH BUDGET - The Cash Budget is a budget prepared to estimate the cash inflows and outflows during a specific period of time in future. • CASH FLOW STATEMENT – The Cash Flow Statement is a financial statement that summarizes the cash inflows and outflows through three major activities (operating, investing and financing). • RATIO ANALYSIS – Liquidity ratios like current ratio, quick ratio and cash ratio measures the financial strength of company in terms cash and marketable securities available in the company to pay off short term obligations.
  • 7. THANK YOU FOR WATCHING