Prof.

Pallavi Ingale
 Transaction Motive
 Precautionary Motive
 Speculative Motive
 Long range cash projection
 Planning of cash requirement Short range cash projection

 Effective control of cash flows Speeding up Collection

 Productive utilization of excess funds
1. Transaction Balance
2. Precautionary Balance
3. Speculation Balance
4. Investment Balance
5. Meeting Operational requirement
5. Providing Liquidity Reserves
6. Maintaining Bank Relationship
7. Investment Image
8. Reservoir for Net cash inflows
 Impact of Inflation on Cash Flow
 Timing of Cash Flow
 Environment
 Managerial Decision
 Current Ratio :- 2:1

 Quick Ratio : 1:1

1. Operating decisions
2. Capital Expenditure
3. Inventory Decisions
4. Customer Credit Policies
5. Supplier Credit Policies
6. Tax on Profits
7. Financial Obligations
8. Investing decisions
9. Financing Decisions
 Objectives
 Avoidance of Bankruptcy
 Avoiding casual mistakes
 Assisting Management control
 Confidence of the lender
 Important utilization of capital
 Action need to take by management
1) Time related actions
2) Volume related actions
3) Scale related actions
4) One off, one time action
 Types of Cash Forecasting

Short term Cash Long term Cash

Forecast Forecast

Methods
1. Receipts and Methods
disbursement Method 1. The cash book
2. The Adjusted Income method of analysis
Method 2. Cash Tank method
3. The working Capital of analysis
differentials Method