Presentation on Cash Management

By Swati Singh Suman Gupta sonam Tripathi

What is cash management?

Cash cycle

Cash management

Objectives of cash management

Maintaining Liquidity

Coordinating Financial Functions

Optimizing Cash Resources

Objectives

Financing

Managing Risk

 managers establish systems that reduce holdings of non-earning cash balances to minimum levels while still providing adequate liquidity . Any excess cash balances are either invested to generate additional income or used to reduce interest expense through the repayment of debt.

company's ability to meet upcoming obligations in a timely and cost effective manner.

Cash managers assist in obtaining both short- and long-term borrowed funds in a timely manner and at an acceptable cost These credit facilities are used to fund a company's cash shortages.

 Cash managers help in the monitoring and controlling of a company's exposure to interest rate, foreign exchange, and other risks.

Cash managers help ensure that managers in other areas of the company understand and implement policies that are consistent with cash management objectives.

Facets of cash management

Cash planning

Investing surplus cash

Facets
Optimum cash level

Managing the cash flows

Facets
Cash planning

cash inflows and outflows should be planned to project cash surplus or deficit for each period of the planning period. Cash budget should be prepared for this purpose

the flow of cash should be properly managed. The cash inflows should be accelerated while, as far as possible, the cash outflows should be decelerated. Managing the
cash flows

Optimum cash level

the firm should decide about the appropriate level of cash balances. The cost of excess cash and danger of cash deficiency should be matched to determine the optimum level of cash balances.

the surplus cash balances should be properly invested to earn profits. The firm should decide about the division of such cash balance between alternative short-term investment opportunities such as bank deposits, marketable securities, or interInvesting corporate lending. surplus cash

Motive for holding cash

Transaction Motive

Motive
Asset or Speculative Motive Precautionary Motive

Motive For Holding Cash

Transaction Motive

cash is held to pay for goods or services. It is useful for conducting our everyday transactions or purchases.

Precautionary Motive

cash is a relatively safe investment. Cash investments rarely lose value (as can stocks or bonds) and are therefore held for safety reasons in a balanced portfolio.

Asset or Speculative Motive

cash investments provide a return to their holders.

There can be many variations on the reasons mentioned above, but these three reasons are perhaps the best overall explanation as to why cash plays an important role in any investor's portfolio. At a very practical level, we own cash investments to pay for our daily or monthly expenses. At a more strategic level, cash provides an investor with a way to control risk as well as gain a return on their investment.

Thank you