A STUDY OF CASH MANAGEMENT ANALYSIS WITH REFERENCE TO

YAMAHA SHOWROOM 2019 - 20

CHAPTER NO. I
INTRODUCTION

1.1 INTRODUCTION
Cash is the important current asset for the operations of the business. Cash 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 firm. The firm should keep sufficient cash, neither more nor less.

Cash shortage will disrupt the firm’s manufacturing operations while excessive cash
will simply remain idle, without contributing anything towards the firm’s
profitability. Thus, a major function of the financial manager is to maintain a sound
cash position. Cash is the money which a firm can disburse immediately without any
restriction. The term cash includes coins, currency and cheques held by the firm, and
balances in its bank accounts. Sometimes near-cash items, such as marketable
securities or bank time’s deposits, are also included in cash. The basic characteristic
of near-cash assets is that they can readily be converted into cash. Generally, when a
firm has excess cash, it invests it in marketable securities. This kind of investment
contributes some profit to the firm.

1.2 MEANING AND DEFINATION OF CASH

 In the words of I. M. Pandey:
“The term cash includes coins, currency and cheques held by the firm and
balances in its bank accounts. Sometimes near-cash items such as marketable
securities or bank time-deposits are also included in cash. The basic
characteristics of near cash assets is that they can readily be converted into cash.
Generally, when a firm has excess cash, it invests it in marketable securities. This
kind of investment contributes some profits to the firm.” Cash is both the
beginning and the end of the working capital cycle, i.e., cash, inventories,
receivables and cash. While the management of all firms should strive hard to
secure larger cash at the end of the working capital cycle than what had been
invested in to it at its beginning, they must also make it a best possible minimum.

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A STUDY OF CASH MANAGEMENT ANALYSIS WITH REFERENCE TO
YAMAHA SHOWROOM 2019 - 20

This is required to optimally utilize the cash and to avoid the situation of idle cash
balances. Its effective management is the key determinant of sufficient working
capital management.

 In the words of P. V. Kulkarni:

“Cash in the business enterprise may be compared to the blood of the human
body; blood gives life and strength to the human body, and cash imparts life and
strength to the business organization”.

 According to J. M. Keyens:
“It is the cash which keeps a business going. Hence every enterprise has hold
necessary cash for its existence”. In a business firm, ultimately, a transaction
results in either an inflow or an outflow of cash. In an efficiently managed
business, static cash balance situation generally does not less. Cash shortage will
disrupt the firm’s manufacturing operation, while excessive cash will simply
remain idle, without contributing anything towards the firm’s profitability.
Therefore, for its smooth running and maximum profitability proper and effective
cash management in a business is of paramount importance.

1.3 OBJECTIVES OF THE STUDY

Objectives of a project tell us why project has been taken under study. It helps us to
know more about the topic that is being undertaken and helps us to explore future
prospects of that organisation. Basically it tells what all have been studied while
making the project.

 To understand how cash is being managed.

 To gain knowledge about the system prevailing in Banks.

 To suggest methods for improving cash management in Banks.

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A STUDY OF CASH MANAGEMENT ANALYSIS WITH REFERENCE TO
YAMAHA SHOWROOM 2019 - 20

1.4 NEEDS OF CASH MANAGEMENT

Cash management is concerned with management of cash in such a way as to achieve
the generally accepted objectives of the firm- maximum profitability with maximum
liquidity of the firm. It is the management's ability to recognize cash problems before
they arise, to solve them when they arise and having made solution available to
delegate someone carry them out. An effective and efficient cash management is
considered to be important for the following reasons:

 Cash management helps to meet obligatory cash out flows when they fall due.

 Cash management ensures that the firm has sufficient cash during peak times
for purchase and for other purposes.

1.5 SCOPE OF CASH MANAGEMENT

Cash is first of all a very important asset for a firm.it helps the firm to meet their
immediate obligations such as payment of salary, rent, wages, etc. Holding cash is
important for the firm but holding excessive cash causes loss of interest to the firm.so
when firm has excessive cash, it should invest it in marketable securities and earn
interest. But by investing the firm has to meet fixed transaction cost. So cash
management is a very important aspect in financial management. All the firms must
see their total cash requirement and thereafter invest their money keeping in mind
prospects of the company.

1.6 LIMITATIONS OF THE STUDY

Following are the limitations faced by me during this project:
 The allotted time period of 8 weeks for the study was relatively insufficient,
keeping in mind the long duration it can take at times, to close a particular
corporate deal.

 The study might not produce absolutely accurate results as it was based on a
sample taken from the population.

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A STUDY OF CASH MANAGEMENT ANALYSIS WITH REFERENCE TO
YAMAHA SHOWROOM 2019 - 20

 It was difficult getting time and access to senior level Finance / HR managers
(who had to be talked to, to get required information) due to their busy schedules
and prior commitments.

 A few of the managers refrained from giving the required information as he

considered me to be from their confidential domains.

1.7 RESEARCH METHODOLOGY

1.7.1 RESEARCH DESIGN
Research is a systematic process of collecting and analyzing information (data) in
order to increase our understanding of the phenomenon about which we are
concerned or interested. A Research Design is the framework or plan for a study
which is used as a guide in collecting and analyzing the data collected. It is the blue
print that is followed in completing the study. The basic objective of research
cannot be attained without a proper research design. It specifies the methods and
procedures for acquiring the information needed to conduct the research
effectively. It is the overall operational pattern of the project that stipulates what
information needs to be collected, from which sources and by what methods.

1.7.2 TYPES OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary
data is defined as data that is collected from original sources for a specific purpose.
Secondary data is data collected from indirect sources.

 Primary Sources
These include the Balance sheet and Profit and loss Account method.

 Secondary Sources
These include books, the internet, company brochures, the company website,
competitor’s websites etc. newspaper articles etc.

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