Download this Paper Open PDF in Browser

Why Firms Tie Money in Cash Balances? Demand for Cash in Firm and its Relation to Operational Business Risk

ZARZADZANIE FINANSAMI PRZEDSIEBIORSTW - TEORIA I PRAKTYKA, W. Pluta, ed., PN AE, Wroclaw, pp.365-375, 2006

13 Pages Posted: 16 Aug 2007  

Grzegorz Michalski

Uniwersytet Ekonomiczny we Wrocławiu - Faculty of Engineering and Economics

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 Classification: G39, G32, G11, M11, D81, O16, P33, P34

Suggested Citation

Michalski, Grzegorz, Why Firms Tie Money in Cash Balances? Demand for Cash in Firm and its Relation to Operational Business Risk. ZARZADZANIE FINANSAMI PRZEDSIEBIORSTW - TEORIA I PRAKTYKA, W. Pluta, ed., PN AE, Wroclaw, pp.365-375, 2006. Available at SSRN: https://ssrn.com/abstract=1007444

Grzegorz Michalski (Contact Author)

Uniwersytet Ekonomiczny we Wrocławiu - Faculty of Engineering and Economics ( email )

ul. Komandorska 118-120
Wroclaw, 53-345
Poland

Paper statistics

Downloads
403
Rank
60,762
Abstract Views
1,721