Every business tends to focus on both short term stability and long term survival and growth and strives to maintain accordingly. If cash is managed efficiently, the company stays healthy and flexible and remains solvent. In this way, providing funds to the business as and when needed is the key to success of a business. In contrast to this, if adequate cash is not available, the situation can lead to bankruptcy - Hence the need of cash management.
Not necessarily yet commonly, having been presented as the first item in one of the main Financial Statements, Balance Sheet, cash is regardedto be the king as it is the most liquid asset of a company. As such, management of cash is of a great value and significance to a business.
Providing sufficient funds to a business and protecting it against the possibility of insolvency is the basic requirement of working capital management that entails cash and liquidity. In fact, there can be many a reason when a business needs to be in the money always while managing it properly. A company needs to make repayment of Loans. It has to pay taxes or it is that it needs to purchase inventory or raw materials. Moreover, holding the cash entails a precautionary measure in order to meet unforeseen events. Therefore, the cash must be managed properly and be provided for arising contingencies.
K.A.Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Vb/Vba Developer
BBA; MBA-Finance; M.Phil-Financial Management; (PhD-Management)
Individual Member of Institute of Management Consultant of India
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