Mataracy
VIP Contributor
When we are talking about cash that means money. Motives for holding cash ; the firm's need to hold cash may be attributed to the following three motives:
- The transactionary motivr
- The precautionary motive
- The speculative motive
TRANSACTIONARY MOTIVE: Cash is held yo meet anticipated payments in the ordinary course of business.
PRECAUTIONARY MOTIVE: Cash is held to meet unexpected cash obligations.The amount of cash held for this purpose would depend on the degree of accuracy if predicted cash flows and the organization's ability to borrow a short notice. Such cash should, preferably, be invested in highly liquid and low-risk marketable securities.
SPECULATIVE MOTIVE: cash is held for the purpose if investing in profitable investment opportunities as they arise.The test of liquidity is the availability of cash to meet the organisation's maturing obligations.
All these three motive are the reason for holding cash .And I need to here from you to.
- The transactionary motivr
- The precautionary motive
- The speculative motive
TRANSACTIONARY MOTIVE: Cash is held yo meet anticipated payments in the ordinary course of business.
PRECAUTIONARY MOTIVE: Cash is held to meet unexpected cash obligations.The amount of cash held for this purpose would depend on the degree of accuracy if predicted cash flows and the organization's ability to borrow a short notice. Such cash should, preferably, be invested in highly liquid and low-risk marketable securities.
SPECULATIVE MOTIVE: cash is held for the purpose if investing in profitable investment opportunities as they arise.The test of liquidity is the availability of cash to meet the organisation's maturing obligations.
All these three motive are the reason for holding cash .And I need to here from you to.