Discuss the premise that cash is the 'essential commodity' of a business, that cash lubricates the business and allows operation

Discuss the premise that cash is the
College
Research Paper
Finance & Accounting
Pages 5 (1255 words)
Download 0
(Name) (Tutor’s Name) (Date) Cash: An Essential Commodity of a Business Introduction Traditionally cash is considered as the lifeblood of a business because survival of a business is impossible without an adequate flow of cash. From an accounting perspective, cash is just an asset that helps business to properly exist…

Introduction

Cash is particularly important for business because people and organizations will not be normally willing to accept anything other than cash in settlement of their claims against the business. This paper will specifically discuss the importance of cash management and cash planning in a business environment. Importance of Cash Financial experts indicate that cash is the ‘essential commodity’ of a business, that cash lubricates the business and allows operations to run efficiently. It is clear that cash is necessary to meet the day to day needs of a business. Evidently, a business firm cannot run its operations efficiently unless it has enough cash to pay its employees and debtors. In addition, adequate cash reserves are vital for business to invest in infrastructure and other expansion projects and to deal with unexpected contingencies. Experts opine that a firm’s cash flow is a key factor determining the long term success of the business. To illustrate, investors and shareholders give particular focus to the strength of cash reserves while evaluating financial position of a company. Clearly, companies lacking adequate cash reserves cannot offer attractive dividends to stakeholders and this condition in turn would adversely affect their long term sustainability. ...
Download paper
Not exactly what you need?

Related papers

Cash and accrual accounting
Meanwhile, accrual basis is accounting techniques that transactions are recognized when item is delivered, and revenues are recorded when they are earned. Although, the two methods are both accounting method and used to record transactions, they are different in various ways and the paper will evaluate the difference of the two accounting methods used to recognize transactions. Cash vs. accrual…
Sweety Ltd: Cash budgeting
i. Cash Budget A cash budget is keeping an account of the inflows and outflows for a specified time period. It is important to know the liquidity of the business and its ability to fulfill everyday operations (investopedia 2011). The budgeting process includes four elements; cash inflows, cash expenditures, change in cash for the period and any new financing needed. Cash sales, purchases, loan…
Internal Cash Control
On the other hand, both the purchasing agent and treasurer issue check disbursements for expenses without each other’s accountability there is a likelihood of fraud taking place because only one person grants authority for payments. Q4.5 (b) memo indicating recommendations for improving company procedures From: Your NamesXXX To: Idaho Company Management Subject: Internal Cash Control Weaknesses…
CASH FLOW
Net earnings plus added back depreciation have contributed to the bulk of cash flow from operating activities, amounting to 3,883+1,682= $5,565 million. Increases/decreases in inventory, receivables, accounts payable, and other miscellaneous items have contributed the remaining $1,068M. Thus the increase has come mostly from the profits earned during the year. …
Statements of cash flows
This explains why bank overdrafts are not part of financing activities. Additionally, the information presented on cash flow of IFRS is quick and easy to flow. Each entity is supposed to present cash flow statement in such a way that it gives an appropriate reporting of financing activities, investing, and operating. For instance, during the investing activities, it is expected that the firm…
Cash and Working Capital
These four phases consist of the following management requirements; cash management which is identifying the cash balance available to run the day to day expenses of the business or firm so as to reduce the cash holding costs (Padachi, 2012). Inventory management is identifying the inventory levels that will enable the business to run smoothly without investment in raw materials. This requires the…
cash Flow
Yum Brands Inc. operates six in different segments including YUM Restaurant International, Pizza Hut (US), Taco Bell (US), KFC (US), A&W All American Food Restaurant (US), YUM Restaurant China and LJS Long John Silver’s (US). This paper comments on the difference between net cash provided by operating activities and net income by speculating on which is likely to be superior sign of…