Asian Journal of Research in Banking and Finance
Year : 2011, Volume : 1, Issue : 3
First page : ( 142) Last page : ( 151)
Online ISSN : 2249-7323.

Analysis of cash management: a case study of public sector enterprise

Dr. Singh Tej, Associate Professor

M.D. University (PG) Regional Centre, Rewari-123401

Online published on 14 December, 2011.

Abstract

Cash management means the efficient collection and disbursement of cash and its temporary investment. Cash management comprises of management of marketable securities also, because nowadays money comprises marketable securities and actual cash in hand or cash at bank. Thus the cash management is concerned with the management of cash inflow and cash outflow of the business concern at any point of time. So the management of cash is very important for the overall activities of a business firm to survive and for smooth conducting of its affairs. For the present study, of the leading public sector enterprises, NTPC has been selected for its significant role and place among PSUs. The present study is an effort to analyse the cash position of NTPC by using ratio analysis technique and correlation analysis and student ’t’ test. The study is based on secondary data which has been collected from the annual reports of the company. The study found that there was high volatility in total cash payment and cash ratio. High cash turnover ratio indicates that the management of the company has better utilization of cash resources and better financial management of cash. However, the study shows that only for a few years, the company has high ratio and during the most of the study period it had very low ratio which is not good for the financial health of the company. The paper also attempts to explain the short and long term solvency of the company. The short term solvency of the company was found to be satisfactory but the long term solvency was not so good because the company did not have sufficient cash during the whole study period to pay its long term loans and interest thereon.

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Keywords

Cash turnover, Daily cash payment, Basic defensive internal, Cash position, Absolute liquid, Cash to debt service.

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