Ch 18: Cash & Liquidity Management

About This Chapter

Study the factors affecting the way companies manage their cash flows and the techniques they use. Take the self-assessment quizzes after each lesson to measure your retention of the material.

Cash & Liquidity Management - Chapter Summary and Learning Objectives

In this chapter, our instructors will introduce you to the methods companies use to manage the timing of cash transactions and the motives that can cause them to accelerate or delay these collections and payments. These lessons were designed by expert instructors and include key terms highlighted in bold. In this chapter you'll learn about:

  • Reasons for holding cash
  • The definition of cash float
  • Cash collection and concentration
  • Management of cash disbursements
  • Investment of idle cash
  • Target cash balance

Video Objective
Motives for Holding Cash Learn why companies hold cash and the costs associated with cash management.
What is Cash Float? - Definition & Types Discuss types of cash float and float management.
Cash Collection & Concentration: Definition & Components Look into the mechanics of cash collection and concentration.
How to Manage Cash Disbursements Discover different types of accounts used to manage cash disbursements and increase float.
Investing Idle Cash Examine reasons for a temporary cash surplus and investment instruments used to capitalize on them.
How BAT & Miller-Orr Models Influence Target Cash Balance Study the formulas used to determine the perfect amount of cash to have on hand.

6 Lessons in Chapter 18: Cash & Liquidity Management
Test your knowledge with a 30-question chapter practice test
Motives for Holding Cash

1. Motives for Holding Cash

As companies collect revenues and pay off their expenses, hopefully they start accumulating cash. They may reinvest that cash in operations, or as we'll learn in this lesson, they may hold cash for a number of reasons.

What is Cash Float? - Definition & Types

2. What is Cash Float? - Definition & Types

When you write or deposit a check, the transaction takes time to process before the money is paid from or available in your account. Businesses are the same. In this lesson, we'll discuss types of cash float and how it is changing with technology

Cash Collection & Concentration: Definition & Components

3. Cash Collection & Concentration: Definition & Components

When a company makes a sale, they don't always get the money right away. In this lesson, we'll examine cash collection time and how to accelerate it using the lockbox system and cash concentration.

How to Manage Cash Disbursements

4. How to Manage Cash Disbursements

Cash disbursements are a major part of any business, but there are ways that businesses can manage disbursements to make money. In this lesson, we'll examine how to manage cash disbursements for maximum value.

Investing Idle Cash

5. Investing Idle Cash

In this lesson, we'll discuss the synonymous nature of short-term securities and cash equivalents. We'll also provide examples of each and explain considerations of investing.

How BAT & Miller-Orr Models Influence Target Cash Balance

6. How BAT & Miller-Orr Models Influence Target Cash Balance

How can a company figure out how much cash to keep on hand? In this lesson, we'll look at two major models for figuring out the optimal cash balance for a business: the BAT model and the Miller-Orr model.

Chapter Practice Exam
Test your knowledge of this chapter with a 30 question practice chapter exam.
Not Taken
Practice Final Exam
Test your knowledge of the entire course with a 50 question practice final exam.
Not Taken

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