Influence of Precautionary Cash Level on Value of the Firm

Abstract

Maximization of wealth of his owners is the basic financial aim in management of enterprise. Cash management must contribute to realization of this aim. Article presents the method of determination precautionary level of cash in firm. Level of cash in firm increase net working capital and cost of holding cash. Both of them decrease value of the firm.

Note: Downloadable document is in Polish.

Keywords: Demand for Cash, Cash balances, Risk, Uncertainty, Real Options, Option Value of Money, Short-Term Financial Management, Working Capital Management, precautionary cash, risk management

JEL Classification: G39, G32, G12, D81, O16, P33, P34