cash project

7/30/2019 Cash Project

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Cashmanagement

Presented by:

Ajit Kumar Roy

Apoorva

Firdaus Jamal

Jai Singh Rathore

Twinkle Vijwani


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what is cash ?

Cash is the ready money in the bank orin the business.It takes cash on hand or in bank to pay

suppliers, to pay the rent and to meetthe payroll.It is not inventory, not account

receivables, not property. These mightbe converted to cash at some point intime.


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WHAT IS CASH MANAGEMENT ? Plan, manage, monitor, and control cash flows

in order to create an acceptable balancebetween holding too little and too much cash.

It is a set of strategies or techniques ofcompany which uses to collect, track andinvest money.

In cash management, companies also workwith cash equivalents such as checks.


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Objectives of cash

management

1) To ensure the availability of cash for day today operation.

2) To reduce the need to borrow and if needed,

to borrow at lower interest costs.3) To minimize idle cash balances.

4) To maximize the return on surplus funds.

5) To reduce bank charges and keep transactioncosts as low as possible.


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Benefits of cash management

system

Cash is the lifeline of any business.

Maximize the availability of cash throughmanaging collections and disbursements.

Cash is used to procure inputs, from whichoutput is produced.

Helps business process receipts and

payments in an organized and efficientmanner.


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services offered as a part of

Cash Management Collection Products

o Cheque Collectionso Cash Collections

Payment Products

o Issue of Bulk Demand Drafts/ Pay orderso Issue cheques on behalf of Banks Customerso Payment of dividend warrants/ interest warrants/

refund order/redemption payments/brokeragepayments

Liquidity Managemento Nettingo Poolingo Cash Concentration


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Motive for holding cash Transactions motive

Need of cash for the currenttransaction of personal and business

exchanges.Precautionary motive

To hold a certain amount of cash for

unforeseeable and unexpected expensesthat cannot be covered by standard riskmanagement instruments like insurance.


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CONtD.

Speculative motive

Securing profit forextraordinary

economic circumstances likefinancial crises and bubble bursts.


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OPTIMUM OPERATING CASH BALANCE MODEL ON THEBASIS OF:

BAUMOLS

MODEL

BERANEKMODEL

CERTAINIT-IES

MILLERSORRMODEL

STONEMODEL

UNCERTAI

-NITIES


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OPTIMAL CASH BALANCE via

BAUMOLS MODEL


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50000000 1002 504 339.3333333 258 210

Order Quantity (Z)

Cost ($)

Z*

Total Costs

Holding Costs:(Z/2)*r

Order Costs:(M/Z)*TC

Z*Z*= [(2M*TC)/r]

M = $10,000 r = .01% .0001 TC = $20

Z = $63,246


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BERANEK MODEL

It is similar as BAUMOLS

model the only difference is

that in Beranek cash outflowis certain and cash inflows

are gradual.


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The miller- Orr model

The Miller-Orr Model provides a formula fordetermining the optimum cash balance (Z), thepoint at which to sell securities to raise cash(lower limit L) and when to invest excess cash by

buying securities and lowering cash holdings(upper limit H). Depends on:

transaction costs of buying or sellingsecurities.

variability of daily cash (incorporatesuncertainty)

return on short-term investments.


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Comparative study


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On the basisof

FertilizerIndustry

Textileindustry

ElectronicIndustry

Food and Agribased-

products

industry

Chemicals andChemical

products

industry

Growth Not

significant

Not

significant

Not

significant

Not

significant

Not

significant

Cash Not

significant

Not

significant

Not

significant

Not

significant

Not

significant

Comparison of five different

industries


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CONCLUSION

If p-value is less than .05then it is a significant for

the industry.Growth rate should be

greater than the cashrequirement.


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Thank you

cash project

Documents