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
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: Suggested Citation