Cash Fund Management in U.P. Cement Corporation Ltd.

Abstract

             The cash management function consists basically of having a sufficient quantity of cash along with maintaining a balance at the basis of marginal benefit and costs associated with it is to meet the lowest just adequate to meet its current obligations. In case, the cash balance is above the demand level, the firm’s earnings would be less than maximum and on the other hand, if it is below the actual cash demand, the firm’s liquidity would be in danger. Thus, the modern cash management function is more complexed and sophisticated and it emphasizes the minimization of unproductive cash balance, optimum utilization of firm’ cash resources, advantageous investment of excess cash, and making of the best possible arrangement for meeting planned and unexpected demands on the cash resources of the business. It is also concerned with the management of the cash cycle by increasing the turnover and velocity of the available cash at its disposal within a given period of time.

            Cash management, thus, combines both liquidity and profitability aspects of a firm’s business activities. This necessitates that a cash manager has to coordinate the various decisions taken by the different departments so that these may remain consistent with the objective of liquidity and profitability.