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Why Firms Tie Money in Cash Balances? Demand for Cash in Firm and its Relation to Operational Business Risk
Grzegorz Michalski Wroclaw University of Economics ZARZADZANIE FINANSAMI PRZEDSIEBIORSTW - TEORIA I PRAKTYKA, W. Pluta, ed., PN AE, Wroclaw, pp.365-375, 2006 Abstract: Maximization of wealth of his owners is the basic financial aim in management of enterprise. Cash management must contribute to realization this aim. Article presents the method of determination precautionary and speculative levels of cash in firm. Levels of cash in firms increase net working capital and costs of holding cash. Both of them decrease value of the firm.
Keywords: Demand for Cash, Cash Balances, Risk, Uncertainty, Real Options, Option Value of Money, Short-Term Financial Management, Working Capital Management JEL Classifications: G39, G32, G11, M11, D81, O16, P33, P34 Accepted Paper SeriesDate posted: August 16, 2007 ; Last revised: August 16, 2007Suggested CitationContact Information
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