Cash Management  A Recurrent Necessity for Business Growth

Dr. A.G.Jayakumari; Swathi Vijaykumar

Volume : VI, Issue : IX, September - 2016

Cash Management A Recurrent Necessity for Business Growth

Dr. A. G. Jayakumari, Swathi Vijaykumar

Abstract :

Cash is the important current asset for the operations of the business. It is the basic input needed to keep the business running on a continuous basis; it is also the ultimate output expected to be realized by selling the service or product manufactured by the company. Cash management involves managing cash efficiently, the proper usage of cash while assessing liquidity and the cash flow and investments. Cash planning protects the financial condition of the firm by developing a projected cash statement from a forecast of expected cash inflows and outflows for a given period. Cash management necessitates speeding cash inflows while slowing down cash outflows, but it may not be considered in isolation. A company’s cash flow is coupled to its operations, investment activities (such as the purchase or the sale of capital equipment), and to its financing activities (such as raising debt or equity funding or repaying such funding). The cash that a firm produces from its operations is tied to its core business activities and provides the best opportunities for cash flow management. Cash plans are very crucial in developing the operating plans of the firm. Cash planning can be done on daily, weekly or monthly basis. The period and frequency of cash planning generally depends upon the size of the firm and philosophy of management. The Cash Management Cycle is followed in industry, which incorporates number of operations; the operations are generally concluded after the appropriate analysis on checking about the desired quality, price transactions of sales and purchases are taking place like wise.