Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
Corporate Cash Holdings: An Empirical Investigation of
Indian Companies
Ravinder Kumar Arora
The paper examines the pattern of cash holdings of 266 Indian companies comprised
in the S&P BSE 500 index for the period 2005-2015 to understand the factors that
influence the level of cash balances. The sample companies hold nearly 12 per cent
of their total assets as cash in 2015. The pattern of cash holdings of the sample
companies is supported by the static trade-off as well as the financing hierarchy
model. Consistent with earlier evidence, firms with large cash balances have higher
market-to-book ratios, higher cash flows and higher cash flow volatility. Companies
that have more liquid assets other than cash, have more tangible assets and pay
more to their shareholders hold lower cash balances. However, contrary to earlier
evidence, size of the firm is not related to the amount of cash holding. Further, firms
with large cash balances have higher leverage.
Field of Research: Finance
1. Introduction
Firms hold cash and other liquid assets to facilitate their transactions (the transaction
motive), to meet possible emergencies (the precautionary motive) and to take
advantage of profitable future investment opportunities (speculative motive).
However, cash holding also has an opportunity cost as idle cash does not generate
any income. Excess cash may also have ‘agency costs’ as it may be spent by
corporate managers on value-reducing projects. Therefore, the decision as to how
much cash should a company hold becomes important.
Empirical studies show that the amount of cash held by firms varies across countries
Swiss non-financial firms held cash ranging between 10-15% of their total assets
during 1995-2004 (Drobetz and Gruninger,2007), Italian private firms held 10%
during 1996-2005 (Bigelli and Sanchez –Vidal,2012), UK firms held 9.9% during
1984-1999 (Ozkan and Ozkan, 2004), Spanish firms held 7.14-8.8% during 19972001(Garcia-Teruel and Martinez Solano, 2008), Japanese firms held 18.5% during
1974-1995 (Pinkowitz and Williamson, 2001) and the U.S. public firms held 20.45
% cash in 2011 (Gao, et al., 2013). The variation in cash holding across different
countries may be due to difference in firm characteristics and corporate governance
structure in these countries.
Even though an extensive amount of research regarding corporate cash holding has
been conducted in developed markets, mainly U.S (Kim et al., 1998; Opler et al,
1999; Harford, 1999; Mello et al.,2008; Gao, et al., 2013), U.K.(Ozkan and Ozkan,
2004), EMU (Ferreira and Vilela, 2004; Pal and Fernando,2010), Netherland
(Bruinshoofd and Kool, 2004), Belgium (Deloof,2001), Spain (Garcia and Solano,
2008), Turkey (Uyar and Kuzey, 2014), no related study, to the best of my
knowledge, has been made in the Indian context. In India, companies other than
banking and finance companies that are included in the S&P BSE 500 index had a
cash and bank balance of approximately Rs.3,124 billion (US$ 48 billion approx.) at
the end of accounting year 2015 The three largest holders of cash were Infosys
(Rs.277 billion or US$ 4.3 billion approx.), NMDC (Rs.184 billion or US$2.8 billion
approx.) and Wipro (Rs.157 billion or US$2.4 billion approx.).
___________________________________________________________
Author: Ravinder Kumar Arora, International Management Institute, B-10, Qutab Institutional Area,
New Delhi-110 016. Email: rkarora@imi.edu
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
India is an emerging market. Emerging markets differ from developed markets in
several respects. Emerging markets have a higher growth potential, lax regulatory
environment, weak corporate governance and greater information asymmetry
between firms and investors. There is also higher dependence of firms on internal
funds as market imperfections in these markets make external financing more costly
for them. It is, therefore, of interest to understand the cash holding behaviour of
Indian firms. Using a sample of 266 Indian firms over the period 2005-2015, this
paper examines the determinants of cash holdings by the sample companies.
2. Literature Review
A large number of empirical studies have investigated the determinants of corporate
cash holding in different countries. Opler, et.al. (1999) examine the determinants of
corporate holding of cash by publicly traded US firms from 1971-1994 and find that
smaller, riskier companies with promising growth opportunities and higher spending
on R&D choose to hold more cash than large, stable, and relatively mature
companies with reliable access to outside capital.
Ferreira and Vilela (2004) investigate the determinants of corporate cash holdings in
EMU countries and find that cash holdings are positively affected by investment
opportunity set and cash flows and negatively affected by asset liquidity, leverage
and size. Ozkan and Ozkan (2004) investigate the empirical determinants of
corporate cash holdings for a sample of UK firms. They find evidence of a significant
non-monotonic relation between managerial ownership and cash holdings. Further,
firms’ cash balances are negatively related to leverage, cash flows and positively
related to the market-to-book (MB) ratio. They do not find a significant relation
between cash holding and firm size. Based on a study of cash holdings of a broad
sample of Swiss non-financial firms between 1995 and 2004, Drobetz and Gruninger
(2006) report that asset tangibility and firm size are both negatively related to cash
holdings while dividend payments and operating cash flows are positively related.
Further, they observe a non-linear relationship between leverage and cash holdings
and no significant relationship of cash holdings with growth opportunities.
Duchin (2007) and Dittmar (2008) relate the amounts of cash held by companies to
their increased risk. Garcia and Solano (2008) observe that firms with more growth
opportunities and larger cash flows have higher target cash levels while the target
cash levels are lower when the use of bank debt and the substitutes for cash
increase. Mello, et al. (2008) find higher cash ratios associated with smaller firms
and firms with high R&D expenses, low net working capital and low leverage. Bigelli
and Vidal (2012) study a wide sample of Italian private firms and observe that cash
holdings are significantly related to size, risk, effective tax rates, cash conversion
cycles and financing deficits. Gao, et al. (2013) find that agency problems affect both
the firms’ target level of cash and how managers react to cash in excess of the
target. Uyar and Kuzey (2014) find that cash levels of Turkish firms are positively
associated with cash flows, growth opportunities and negatively associated with the
amount of capital expenditure, liquid assets, degree of tangibility of assets, financial
debt ratio and leverage. They also observe that the Turkish firms have a target cash
level.
Some of the important firm characteristics that may have an influence on the level of
cash held, identified by the above studies, include firm size, growth opportunities,
cash flows and their stability, leverage, availability of liquid assets, asset tangibility,
capital expenditure, expenditure on research and development and acquisitions ,
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
payout to shareholders, and promoter shareholding percentage, length of cash
conversion cycle, probability of financial distress, etc.
3. The Methodology and Model
The sample for the study has been selected from the universe of companies
comprised in the S&P BSE-500 Index. The S&P BSE 500 index, consisting of 500
stocks, represents nearly 93% of the total market capitalisation on BSE (Mumbai
Stock Exchange). It covers all 20 major industries of the economy. The sample
excludes financing, investment, credit rating companies and utilities. The period of
the study is 2005-2015. Companies for which data on all variables is not available for
the entire ten-year period have also been excluded. The final sample consists of 266
firms. With 11 years of data on these 266 firms, the number of firm years covered in
the study is 2926.
In line with the earlier studies, the variables used in the study are defined as follows:
The dependent variable in this study is the cash-to-assets Ratio (CA). It is measured
as the ratio of cash and cash equivalents to total assets minus cash and cash
equivalents.
Growth Opportunities: The ratio of the market value of a firm's assets to the book
value of its assets (MB) is used as a proxy for its future growth opportunities. Firms
with strong growth opportunities face higher financial distress cost and are,
therefore, expected to hold larger cash balances to avoid high financial distress cost.
The trade-off theory, therefore, posits a positive relation between cash holding and
growth opportunities.
Firms with higher growth opportunities are expected to hold more cash as these
firms would not like to forego profitable investment opportunities. Also such firms are
characterized by higher level of information asymmetry and are reluctant to raise
external finance due to its higher cost.
On the other hand, growth firms may not accumulate cash as these firms will be
relying more on internal resources. Therefore, in the pecking order world, there can
be both a positive and negative relationship between cash holdings and the MB ratio.
Firms with poor investment opportunities may also hold higher amounts of cash if the
agency theory holds.
Firm size (RS) is measured as the natural logarithm of the book value of assets in
2005 Indian rupees. Firm size can both be positively and negatively related to cash
holdings. Large firms can raise external finance at a lower cost as they enjoy
economies of scale, have lesser information asymmetry and being diversified, face a
lower probability of financial distress. They are, therefore, expected to hold low cash
balances. On the other hand, large firms may generate higher levels of cash flows
and accumulate more cash.
.
Leverage (LEV) is measured using the debt-to-assets ratio defined as (long-term
debt plus short-term debt) divided by book value of assets. Firms with higher
leverage may hold lower levels of cash reserves. According to the pecking order
theory, firms increase debt when their investments exceed retained earnings and in
such situations, the cash levels decrease. High leverage firms are also subject to
higher investor scrutiny and low managerial discretion, leading to lower cash
reserves. Conversely, high leverage firms may hold higher cash balances due to a
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
higher probability of financial distress. Therefore, Cash holding may have either a
positive or negative relation with leverage.
.
Cash flow (CF) is measured as earnings after interest, dividends, and taxes, but
before depreciation and amortisation, divided by net assets. The relationship
between cash flows and cash flows can be expected to be either positive or
negative. It should be positive when firms accumulate such cash flows to build up
financial slack after meeting their cash requirement for new projects, for repayment
of debt and for payment of dividend. It should be negative when firms do not feel the
necessity to keep large amounts of cash in view of high cash flows.
R&D expense-to-sales ratio (RD) is used as a measure of product uniqueness and
the potential for financial distress costs. Firms that do not report R&D expenses are
considered to be firms with no R&D expenses. Firms that spend more on R&D are
expected to hold large cash holdings.
Capital expenditure to assets ratio (CE) measures the effect of capital expenditure
on cash holdings. Capital expenditure and cash holding are expected to have a
negative relationship.
Net working capital, minus cash (NWC) is used as a measure of liquid asset
substitutes. Firms that have higher amounts of liquid asset substitutes (e.g.
inventory, receivables) can liquidate these assets to overcome financial distress.
Such firms are, therefore, expected to hold lower cash balances.
Volatility of cash flows for a year (VOL) is measured as the standard deviation of
quarterly cash flows in the previous two years and is scaled by the value of total
assets less cash. A positive relationship is expected between cash flow volatility and
cash holding
Promoter holding (PH) is measured as the percentage of ordinary stock held by the
promoters. Agency costs of managerial discretion are likely to be more for firms with
a higher percentage of promoter holding. Such firms are expected to hold more cash
than those with lower promoter holding.
Asset tangibility (TANG) is measured as the ratio of tangible fixed assets to total
assets. Since tangible assets can be sold by a firm facing cash shortage or pledged
for raising debt, firms with higher asset tangibility are expected to hold less cash
reserves.
Cash conversion cycle (CCC) is measured as the average inventory period plus
average receivables period minus average accounts payable period. A negative or
positive relationship can be expected between the length of cash conversion cycle
and the cash holding.
Probability of financial distress (POFD): The inverse of a variation of Altman’s (1968)
ZSCORE is used as a measure of the probability of financial distress (POFD),
following Kim et al. (1998). The ZSCORE is computed as follows:
3.3 
EBIT
Sales
Re tained Earnings
MarketValue of Equity
 1.0 
 1.4 
 0.6 
Total Assets
Total Assets
Total Assets
Book Value of Total Debt
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
A measure of liquidity that is included in the original Altman’s (1968) ZSCORE is
excluded from the above version because the analysis here is meant to explain
determinants of liquidity. Kim et al.(1998) predict a negative relation between
probability of financial distress and cash holdings arguing that firms facing financial
distress are unlikely to hold high amounts of cash. An argument in favour of a
positive relation between liquidity and probability of financial distress may also be
justified on the reasoning that firms facing high probability of financial distress would
accumulate cash to ward off financial distress.
Industry: Sample firms are grouped into manufacturing and non-manufacturing firms.
A dummy variable (IND) having value of 1 for manufacturing firms and 0 otherwise is
used to differentiate their specific determinants of liquidity. A more detailed
classification of firms in different industries is not made as the number of firms in
each industry would have been very small. Manufacturing firms may have cash
requirements that are different from non-manufacturing firms.
Sector: Sample firms are divided into government owned and privately owned firms
to control for sector-specific determinants of liquidity. A dummy variable (SEC)
having a value of 1 for government owned firms and 0 otherwise is used.
Government owned firms are expected to hold higher cash balances than privatelyowned firms due to greater managerial discretion and lower shareholder monitoring.
To understand how the explanatory variables influence cash holdings, firm years are
divided into quartiles on the basis of cash-to-assets ratio. As these quartiles are
constructed every year, there is an overlap in the ranges of cash-to-assets ratio.
Comparison of the variables between firms holding large cash balances ( firms falling
in the fourth quartile) and firms holding small cash balances (firms falling in the first
quartile) should reveal whether these firms differ from each other significantly in
respect of characteristics described by these variables.
Further, a panel regression is carried out where the dependent variable is the cashto-assets ratio and the explanatory variables and control variables used are those
explained earlier.
4. The Findings
Table 1: Cash Balances and Firm Characteristics
Variable
First quartile
Second
quartile
Third
quartile
Fourth
quartile
t-statistic
(p-value)
Cash/assets
0.008
0.022
0.068
0.398
-31.31
(0.007)
(0.022)
(0.064)
(0.247)
(0.0000)
7.472
7.241
7.350
7.464
0.06
(7.391)
(7.190)
(7.250)
(7.282)
(0.9500)
1.94
2.18
2.76
4.54
-9.08
(1.53)
(1.67)
(2.04)
(3.21)
(0.0000)
0.013
0.010
0.010
0.008
3.91
(0.000)
(0.001)
(0.002)
(0.001)
(0.0002)
0.114
0.127
0.159
0.264
-16.05
(0.103)
(0.108)
(0.136)
(0.213)
(0.0000)
Real Size
Market-to-book ratio
R&D/sales
Cash flow/assets
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
Net working
0.163
0.162
0.164
0.063
3.19
capital/assets
(0.148)
(0.158)
(0.166)
(0.088)
(0.0000)
Capital
expenditure/assets
0.038
0.039
0.039
0.041
-1.19
(0.033)
(0.034)
(0.033)
(0.035)
(0.0022)
Acquisitions/assets
0.005
0.006
0.006
0.005
0.00
(0.000)
(0.000)
(0.000)
(0.000)
(0.9999)
0.043
0.045
0.045
0.045
0.068
(0.035)
(0.035)
(0.034)
(0.037)
(0.4989)
0.289
0.270
0.221
0.167
5.08
(0.281)
(0.271)
(0.186)
(0.043)
(0.0000)
0.118
0.127
0.113
0.184
-3.67
(0.071)
(0.076)
(0.079)
0.108)
(0.0005)
52.14
52.40
52.87
58.24
-9.22
(51.82)
(52.49)
(54.05)
(60.58)
(0.0000)
0.516
0.487
0.440
0.313
11.72
(0.530)
(0.491)
(0.441)
(0.301)
(0.0000)
101
92
68
65
3.09
(79)
(69)
(60)
(46)
(0.0029)
0.336
0.340
0.191
0.120
6.39
(0.273)
(0.259)
(0.148)
(0.023)
(0.0000)
Payout to shareholders
Total leverage
Cash flow volatility
Promoter holding
Asset tangibility
Cash conversion cycle
Probability
distress
of
financial
The results of the univariate analysis are reported in Table1
Contrary to the observation by Opler, et al (1999) and Bigelli, et al (2012) that
smaller firms hold larger cash balances, I find no significant difference in the firm size
between the first and the fourth quartile of cash holding. The market-to-book ratio
increases monotonically with cash holdings implying that firms with higher growth
opportunities hold more cash, a result consistent with the pecking-order theory and
findings of Opler et al (1998). Some other results that are consistent with the
pecking-order theory are negative relation of cash holdings with R&D expenses and
leverage and a positive relation of cash holdings with cash flows. Positive relation
between capital expenditure and cash balances is inconsistent with the pecking
order theory but consistent with the trade-off theory. Consistent with the trade-off
theory, availability of cash substitutes induces firms to hold lower levels of cash as
evidenced by the ratio of net working capital to assets (NWC). Firms with lower
levels of NWC hold more cash.
Asset tangibility is significantly negatively related with cash holdings. Firms with
larger tangible assets hold less cash balances as tangible assets can serve as
collateral to raise debt and therefore reducing the requirement of keeping larger cash
reserves.
As expected, there is a significant positive relation between cash flow volatility and
cash holdings. Consistent with the agency theory, higher cash balances are
associated with higher levels of promoter holding. Higher levels of cash conversion
cycle are related to low levels of cash holdings implying that higher levels of
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
inventories and receivables serve as good cash substitutes inducing firms to hold
less cash. Probability of financial distress is negatively related to cash holdings
implying that firms facing financial distress are unlikely to hold excess cash. The
result supports the evidence in Kim, et al(1998).
Contrary to the findings of Opler et al (1998), no significant association is observed
between cash holdings and expenditure on acquisition and shareholder payout.
Regression Tests
Table 2 presents the estimated results of my panel regression model. Application of
fixed effects redundancy tests and Hausman (1978) tests reveals that the panel data
model with fixed period effects best fits the data. Therefore, the coefficients reported
in Table 4 (model1) are from the panel data regression with fixed period effects.
The direction of relationship of cash holdings with market-to-book ratio, cash flows,
R&D expenses, net working capital, cash flow volatility and asset tangibility matches
that under the univariate analysis. The important difference is with respect to
leverage and pay out to shareholders.
Table 2: Panel Regression Results
Independent Variable
Model 1
Model 2
Model 3
Intercept
0.2637
(0.0238)
0.4233
(0.0109)
-3.8036
(-0.0015)
Market-to-book-ratio
0.0123
(0.0002)
0.0171
(0.0000)
0.0363
(0.0000)
Size
-0.0016
(0.8760)
-0.0284
(0.0000)
0.0773
(0.0653)
Leverage
0.2350
(0.0000)
0.2201
(0.0000)
0.9739
(0.0000)
Cash flow
0.6254
(0.0000)
0.6153
(0.0000)
2.6577
(0.0000)
Expenditure on R&D
-0.0395
(0.8179)
-0.0467
(0.7841)
-3.523
(0.0039)
Net working capital
-0.4268
(0.0000)
-0.4384
(0.0000)
-0.9905
(0.0000)
Expenditure on acquisitions
0.0109
(0.6641)
0.0174
(0.6673)
0.1728
(0.5481)
Cash flow volatility
0.0476
(0.0183)
0.0432
(0.0000)
-0.0034
(0.9602)
Promoter holding
0.0000
(0.0001)
0.0000
(0.2730)
-0.0000
(0.4636)
Shareholder pay out
-0.6594
(0.0020)
-0.6629
(0.0000)
-2.6265
(0.0000)
Capital expenditure
-0.3211
(0.1357)
-0.3368
(0.0000)
0.3385
(0.1660)
Asset tangibility
-0.4617
(0.0000)
-0.4348
(0.0000)
-2.9395
(0.0000)
Cash conversion cycle
0.0000
(0.2162)
0.0000
(0.7467)
-0.0001
(0.2192)
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
Probability of financial distress
0.0002
(0.9679)
-0.0009
(0.8016)
-0.0496
(0.0622)
Industry dummy
-0.0517
(0.2455)
-0.3259
(0.8053)
0.0943
(0.9198)
Sector dummy
0.0242
(0.0520)
0.0537
(0.6880)
0.0735
(0.4317)
0.802
0.805
0.67
Adjusted R
2
There is a positive and significant relation between cash holding and market-to-book
ratio, as expected. This implies that firms having growth opportunities keep large
cash balances to avoid foregoing profitable investment opportunities. Many previous
studies also find a positive relation between cash reserves and growth opportunities.
There is no significant relation between firm size and cash balances. The result is
contrary to expectations but in line with the findings of some earlier studies by Ozkan
and Ozkan, 2004; Garcia-Teruel and Martinez-Solano, 2008).Leverage has a
significant positive association with cash holdings. The result is consistent with the
arguement that high leverage firms may hold higher cash balances due to a higher
probability of financial distress.
Cash holdings have a significant positive relation with cash flows. The result is in line
with the arguement that firms with higher cash flows hold more cash to avoid losing
profitable investment opportunities. It also means that firms prefer to use internally
generated funds compared to external funds as predicted by the pecking order
theory. Several earlier studies also find a similar relation between cash holdings and
cash flows.
Consistent with the results of many previous studies, I find a significant negative
relation of cash holdings with net working capital other than cash. Availability of liquid
assets other than cash enables a firm to hold lower cash balances as these liquid
assets can be easily converted into cash in case of need.
In line with expectations, a significant positive relationship is observed between cash
flow volatility and cash holding. Firms facing high cash flow uncertainty are expected
to maintain high cash balances to avoid cutting dividends or to liquidate assets at a
loss to generate the necessary cash.
Consistent with the pecking order theory, payout to shareholders has a significant
negative relation with cash balances.
Asset tangibility has a significant negative relation with cash holdings. The result
supports the findings of Drobetz and Gruninger (2007). Firms with more tangible
assets are expected to hold lower cash balances as these assets can be liquidated
in case of urgent needs.
Government owned firms are expected to hold higher cash holdings compared to
the private sector firms as evidenced by a significant positive relation between the
sector dummy and cash holdings. The finding is in line with expectations.
The regression results do not show any significant relation between cash holdings
and capital expenditure, expenditure on R&D, expenditure on acquisition, promoter
Proceedings of 34th International Business Research Conference
4 - 5 April 2016, Imperial College, London, UK, ISBN: 978-1-925488-02-9
holding, cash conversion cycle, probability of financial distress and industry
classification.
Regression estimates based on two more models are presented in Table 2. Model 2
and model 3 are also panel data regression models with fixed period effects. Model 2
uses the market value of a firm’s assets as proxy for the size explanatory variable.
Model 3 uses the natural logarithm of the cash-to-assets ratio as the dependent
variable.
Regression estimates of model 2 are similar to that of model 1 except that in model
2, the firm size is negatively related with cash holding in a statistical significant
manner and the coefficient of the probability of financial distress has a negative sign.
Model 3 also relates cash holding with the firm size but in a positive direction. The
relation between cash holding and the firm size is, therefore ambiguous. Coefficients
for cash flow volatility, promoter holding, capital expenditure, cash conversion cycle
and industry dummy in model 3 have exactly opposite signs of those under model 1
and are also statistically not significant. Similar to model 2, the coefficient of
probability of financial distress has a negative sign and is statistically significant.
In sum, cash balances of the sample Indian companies have a strong positive
relation with growth opportunities, cash flows, leverage, cash flow volatility and a
strong negative relation with liquid assets, capital expenditure, expenditure on R&D,
shareholder payout and asset tangibility. Positive association of cash balances with
growth opportunities is consistent with the trade-off theory and the pecking order
theory. With the fixed effects models 1 and 2, the coefficients of cash flows,
expenditure on R&D, shareholder payout, capital expenditure are consistent with the
pecking order theory and the coefficients of leverage, liquid assets, cash flow
volatility, asset tangibility are consistent with the trade-off theory.
5. Summary and Conclusions
The static trade-off as well as the financing hierarchy model seems to explain the
pattern of cash holdings of Indian companies for the period 2005-2015. Firms that
hold large amounts of cash have higher market-to-book ratios (strong growth
opportunities), larger cash flows, higher leverage and higher cash flow volatility.
Firms that have higher levels of liquid assets, higher amounts of tangible assets,
higher capital expenditure, higher R&D expenditure, and higher shareholder payout
have relatively lower levels of cash holdings. There is no clear relationship between
the size of the firm and the amount of cash holding.
The results of the study have important implications for investors and corporate
managers in emerging countries. It is important to understand the firm characteristics
that are associated with the holding of cash by companies in emerging countries as
these characteristics may be different from those of firms in developed economies.
Investors are in a better position to assess whether a firm is holding the right amount
of cash. Managers can take into account these firm characteristics when deciding on
the amount of cash to be held by the firm.
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