Emerging trends in cash management

Type :

Indian project

Pages :

35 pages

Format :

.doc

Published date :

04/29/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
Background study of cash management
Two basic models that help in determining levels of cash
1. The Baumol model
2. The Miller Orr model
What is cash management
The four P's of marketing cash management
Environmental analysis
Generic strategies
Organizational goals
Product portfolio of cash management
Case studies
Comparative analysis
Conclusion

Abstract

Whenever any long-term investment is considered the future cash flows from the project, the uncertainty of those cash flows, and the opportunity cost of the funds invested in the project are evaluated. Investments in current assets are also evaluated by all organizations in the same manner but over a short-term period. The time value of money plays an important role in the valuation of long term investments as these investments produce expected cash flows into the future. In the case of current assets (cash, marketable securities, accounts receivables, inventory) provide expected cash flows only in the short term, therefore the time value of money is of lesser importance while evaluating current assets. Whenever decisions are made for new product development and marketing there is capital investment. Investments made in current assets support the day to day operations of the firm. Therefore investment in long term projects there has to be investment in current assets in order to support the day to day operations that will be required by the project. Current assets are the "Working Capital" put together to work in order to generate benefits monetary or other wise from the investment made.The type of business, whether extractive, retail, manufacturing or service, affects the way an organization invests. In some industries, large investments in machinery and equipment are necessary. In other industries, such as retail firms, less is invested in plant and equipment and other long-term assets and more is invested in current assets such as inventory and receivables.