Review Of Literature For Financial Performance Analysis Project
Cash has to meet the prime requirements of general acceptability and availability for instant use in purchasing and payment of debt.
Acceptability to a bank for deposit is a common test applied to cash items.
Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.Creditors, employees and lenders expect to be paid on time and cash is the required medium of exchange.However, some firm retain an excessive amount of cash to meet any unexpected circumstances that might arise.According to (Davidson et al, 1999), cash is any medium of exchange, which is immediately negotiable.It must be free of restriction for any business purpose.This chapter discusses the theoretical framework, empirical review both covering early studies between 1980 to 1999 and the current studies covers 2000 to 2009.At the end the summary of whole discussion has been provided..Proper cash management permits the owner to adequately meet cash demands of the business, avoid retaining unnecessarily large cash balances and stretch the profit generating power of each dollar the business owns (Zimmerer et al, 2008).Cash management is particularly important for new and growing businesses. Davidson et al, 1992) indicated in their book that cash flow can be a problem even when a small business has numerous clients, offers a superior product to its customers, and enjoys a sterling reputation in its industry.They further added that cash management is a vital task because it is the most important yet least productive asset that a small business owns.A business must have enough cash to meet its obligations or it will be declared bankrupt.