A Study on cash management and determinants of cash holding

In every business cash is the backbone of any organization and it also plays vital role in decision making. Cash is the blood of any organization. A business cannot operate without cash and without cash management. Cash movement is a two-way traffic, cash inflow and cash outflow. Cash management means management of liquidity in order to meet their day-to-day commitment. Cash management fulfills certain motives like transaction, precautionary, speculative and tax motive. In particular firms with strong growth opportunities and riskier cash flows hold high cash. Firms that have the greatest access to capital markets, such as large firms and those with high credit ratings should hold low level of cash. There are certain no of determinants of cash holding like growth opportunities, sale of asset, dividend to shareholders etc.