AN
INTERNSHIP REPORT
ON
“A study of Cash Management
Of Safalta”
Submitted to
BANASTHALI VIDHYAPITH
For the Fulfilment of the degree of
MASTER IN COMMERCE
ACKNOWLEDGMENT
I would like to express my sincere gratitude to my esteemed dean, Mr Harsh Purohit, and our department
head, Mr Abhishek Pareek, for their assistance and blessings in helping us complete this project successfully.
To everybody who contributed to the creation of the project report, I would like to offer my sincere gratitude. I
want to sincerely thank our coordinator Vandana Vashisht ma'am for showing us such care and kindness
during the programme.
I also want to express my sincere gratitude to Project Guide Dr Pawandeep Bindra, who spent a lot of time
and important recommendations helping me finish my project report.
Lastly, I wish to thank my parents and friends who supported and helped me incompletion of this project.
TABLE OF CONTENT
CHAPTER NO.
CHAPTER NAME
1
ABSTRACT
2
INTRODUCTION
About The Topic
About The Company
3
ORGANIZATIONAL ENVIRONMENT
4
PRODUCTS/SERVICES OF THE ORGANIZATION
5
SWOT ANALYSIS
Strengths
Weaknesses
Opportunities
Threats
6
FINDINGS AND DISCUSSION
Cash Planning
Cash Management
Cash Flow Statement
Fund Flow Statement
Cash Budget
Findings
7
RECOMMENDATIONS FOR IMPROVEMENT
8
BIBLIOGRAPHY
ABSTRACT
"A Study on Cash Management of Safalta" is the project's name.
Finding out Safalta's cash status is the major goal.
It is impossible to overstate the importance of Cash for maintaining daily business operations. Hardly any
businesses exist that don't require any cash payments. The cash requirements for different businesses vary.
A company should strive to maximise its wealth. A company should generate a significant return from its
operations to succeed in doing so. The company must invest enough money in a current asset to generate
sales. Sales don't immediately turn into cash; hence current assets are necessary.
The process of turning revenues into cash always involves an operating cycle. The goals are to assess the
effectiveness of cash, inventory, debtors, and creditors while also analysing cash management.
To further comprehend the firm's status in terms of profitability and liquidity. The business frequently acts
inadequately. As a result, the company improves performance and focuses on the neighbourhood.
Due to its limited financial resources, the corporation must borrow money from the public and other parties.
Liabilities are produced for the company. Every year, the working capital decreases. As a result, they should
take the appropriate actions to increase working capital.
INTRODUCTION
ABOUT THE TOPIC
One cannot overstate the importance of having cash on hand to conduct daily business operations. There aren't
many businesses that operate without some sort of financial investment. The cash requirements of different
businesses vary.
A company should strive to maximise its wealth. A company should achieve this goal by generating enough
profits from its operations. Because sales do not immediately turn into cash, the company must invest enough
money in current assets to generate sales. The process of turning revenues into cash always involves an
operating cycle.
Since cash is essential for day-to-day operations and is one of the most important current assets for all types of
businesses, managing cash effectively is the responsibility of the company's finance department. Managing
cash entails tasks like cash collection and efficient use of that cash to maximise gains or minimise losses. The
goals are to assess the effectiveness of cash, inventory, debtors, and creditors as well as cash management.
Learn more about the firm's profitability and liquidity status. By employing ratio analysis to reach conclusions
that are crucial to understanding the efficiency or inefficiency of currency, these goals are accomplished.
Cash flows are essential to a company's daily business activities. To maintain growth in sales and profitability,
a company requires cash to invest in inventories, accounts receivable, and fixed assets, and to pay operating
expenditures. The company may be producing an appropriate profit, but it may experience cash flow problems
because of its expanding needs, which could quickly deplete cash.
If the company's cash requirements are reasonable, its weak cash situation will be improved. A company may
occasionally have extra cash and sit on it. Such excessive monetary outflows once more. If cash planning is
used, such extra cash flows can be predicted and effectively invested. An approach for controlling and
managing cash utilisation is called cash planning. It aids in reducing the likelihood of an idle cash balance by
anticipating the firm's future cash demands and flow. Cash planning safeguards the company's financial health
by creating a projected cash statement from a projection of anticipated cash inflows and outflows for a
specific period. Forecasts may be based on actual operations currently underway or predicted operations in the
future. The creation of the company's overall operating plans involves the use of cash plans extensively.
Cash management can be done daily, weekly, or monthly. The length and frequency of cash planning typically
depend on the company's size and management style. Forecasts are created daily and monthly by large
companies. Weekly and monthly predictions are typically created by medium-sized businesses. A lack of
knowledge and small-scale operations may prevent small businesses from creating official financial
predictions.
A written forecast of a company's future cash position is called a cash budget. It forecasts, often monthly as
the budget period progresses, the cash revenues from various sources, the cash disbursements for various
purposes, and the consequent financial situation for some future periods. As a result, it serves as a formal
statement of the anticipated circular movement of cash through the company. A cash budget's typical forecast
period is one year, divided into either weekly or monthly intervals. This makes it possible to take into account
seasonal variations in cash flow. The finance manager may create a budget for a complete year if cash flows
are generally consistent. He might have to settle with a projection that is only for the next three months if the
outlook is hazy.
The cash budget includes all anticipated cash inflows, including income and non-income sources like
proceeds from the sale of stocks, bonds, and fixed assets. The income statement does not include the latter
items (receipts from non-revenue sources). A cash budget similarly accounts for all forms of cash outflow,
such as payments for expenses accrued in previous periods, the forecast period, current periods, or future
periods, as well as payments for expenses that are not immediately related to them, like the purchase of fixed
assets or dividend payments to stockholders.
The income statement would not include payments related to the acquisition of fixed assets or dividend
payments. Similarly, some items would appear on the revenue statement but not in the cash budget.
The cash budget does not include any appropriations, such as depreciation and amortisation related to patents,
which only appear in the expected income statement. For these reasons, it is important to distinguish between
the cash budget and the income statement.
The cash budget differs from other budgets in that it is more focused on the timing of cash receipts and
disbursements than other budgets, which are more focused on the timing of actual transactions.
ABOUT THE COMPANY
Safalta.com (Safalta Education Pvt. Ltd.) has always attempted to anticipate the needs of young Indian
hopefuls. Safalta plans to innovate in the expanding online education field, attracting hardworking and
talented individuals. Here, they give kids a comprehensive educational experience while making sure that
their students receive the direction and information they need to succeed and have a successful future.
For a range of competitive tests, candidates can get customised online coaching from renowned academics at
Safalta.com from the comfort of their own homes. Live interactive online classes are only delivered by
knowledgeable professors.
With a ten-year history in the education sector and content that has changed the lives of millions of students,
Safalta is unmatched and distinctive.
With so many professional options available in this day and age of technology and fierce competition, having
the right study materials and advice is essentially the only way to succeed.
Safalta is a platform that focuses on the following in the area of various National & State level Government
and Competitive Exams:

Quality Education

Accessibility to All

Economic Viability
Safalta seeks to open up knowledge beyond the financial and urban high walls that limit the hopes of many
pupils for the future. Reaching as many pupils as possible who hope for a bright future is the aim and
inspiration behind Safalta.
At this venue, they have gathered specialised instructors and subject-matter experts from all over the nation
for a variety of subjects and topics relevant to and needed for government examinations like SSC, IBPS, SBI,
RBI, Railway, NDA, Air Force, CDS, CTET, UP TET, MP TET, REET, Other State TET Exams, Lekhpal/
Patwari, Police (SI, Constable), and many others, Competitive Exams like NEET, J
Safalta.com intends to live up to its name and serve as a platform and resource for numerous students' career
achievements in a variety of fields.
The Amar Ujala Group's projects include Safalta.com and Safalta Class. Amar Ujala Safalta was launched on
August 1, 2011.
One of the major Hindi newspapers in India, Amar Ujala, was founded in 1948 and now publishes 22 editions
in 179 districts throughout 6 states and 2 union territories. It is one of the nation's most widely read
broadsheet newspapers, with a total daily circulation of 4.70 crores. Amar Ujala's geography encompasses
Haryana, Chandigarh, Punjab, Delhi NCR, Jammu and Kashmir, Himachal Pradesh, Uttar Pradesh, and
Uttarakhand in addition to covering North India.
The strength of Amar Ujala resides in its reliable and excellent journalistic coverage, which focuses on a range
of local concerns in our 179 operational districts and topics of state, national, and worldwide prerogatives.
The primary areas of focus for Amar Ujala Web Services are high-quality articles, videos, in-depth reports,
and the assurance of reliable news. Over 65+ million unique visitors from around the world visit
Amarujala.com and the app each month, and there are more than 300 million video views. With
approximately 8.5 million Facebook fans, 4.5 million YouTube subscribers, 1 million Instagram followers,
and 2.1 million Twitter followers, it maintains an active social media presence. To make it simpler for the
public to absorb the content, AUW provides the Amar Ujala mobile app in Hindi for both Android and Apple
users.
To provide a true portrayal of the condition of affairs, we at Amar Ujala Limited take satisfaction in raising
awareness about important problems, expressing our ideas in-depth, and covering them from an educational
yet impartial perspective.
Amar Ujala Limited's CSR division was established to empower everyone to build a better future. The Amar
Ujala Foundation was founded in 2012, and in keeping with the organization's overarching purpose, the
foundation keeps expanding the service reach of impact-generating initiatives. Through direct action on the
ground to empower everyone, AUF has established several field activities that are evolving towards enabling
broader swaths of society to live their lives with pride and dignity. Other objectives include empowering
women, protecting the environment, helping the elderly, honouring unsung heroes from all walks of life, and
fostering greatness in our younger generation.
ORGANIZATIONAL ENVIRONMENT
The term "organisational environment" refers to a group of traits that characterise an organisation and set it
apart from others throughout a specific period, influencing how its personnel behave. These traits have an
impact on the employees' functional behaviour, trends, and motivations. The internal work environment within
the company is connected by these traits, which distinguish it as a unique element of the company. The
organisational setting distinguishes the company from other businesses. Additionally, it gives the organisation
a modicum of stability.
An organisational environment is not a monolithic thing; rather, it is the result of a complex interaction
between many different elements, each of which has a different impact on the organisation. The environment's
characteristics form the framework for how the organisation carries out its operations. The environment places
restrictions on organisations in terms of law, technology, sociocultural, and other factors. Together, they make
up the framework, which refers to the overarching circumstances under which the organisation carries out its
operations. Thus, the environment has an impact on the organisational dynamics and working methods either
directly or indirectly.
Organisations have open systems that interact with the environment regularly, both influencing and being
influenced by it. The organisation doesn't just exist; it also has constraints and access to resources in its
surroundings. The organisation must continuously adapt to its ever-changing environment if it is to continue to
be successful. Organisational failure typically results from a failure to adapt to the environment sufficiently.
Differentiating how the environment affects organisational activities is not always possible, and drawing clear
connections between the organisation and the environment in which it operates is equally trickier. One need
only presume that they are simultaneous processes, therefore descriptions of these influences are typically
speculative and even hypothetical.
Effective results, such as organisational commitment, are related to supportive, employee-focused
organisational environments. There is a connection between the workplace culture and employee fatigue.
Employee perceptions of empowerment can be significantly impacted by the organisational environment.
Perceptions of empowerment are facilitated by a participative environment, such as one that ‘recognizes the
crucial worth of human capital to the success of an organisation through valuing and appreciating employees'
contributions.
Before they can become motivated to meet the requirements of the consumers, employees must feel that their
own needs have been met within the organisation. Because of their more positive attitudes and behaviours,
employees who are exposed to organisational practises that make them feel valued and appreciated by their
employers give customers a better overall experience.
Therefore, the effectiveness of the organisation depends on management's emphasis on ensuring that
employee work attitudes and behaviour are supportive of the provision of high-quality service. It is frequently
emphasised that management practices must contain the foundations for employees so they can provide clients
with great services. This indicates that it's crucial to create a different environment behind the service
environment where the elements that support a service environment can reside.
The quality of an employee's interpersonal interactions with co-workers, managers, and the company is the
focus of social support, a crucial organisational resource that fosters respect and admiration for employees.
Theoretically, social support is advantageous to us as workers since it enables us to manage the negative
impacts of stressors.
Additionally, having a good working connection with your line manager has a favourable impact on your
entire work experience, influences effective work outcomes like dedication, and lessens your level of stress.
Employees' feelings of control rise when line managers are seen as being supportive. And when we believe
that they can be trusted to decide how their tasks are carried out, we experience a sense of loyalty and
attachment to the company, and we reciprocate by carrying out the demands of our superiors and the
organisation. Employees with a greater sense of control over how their jobs are carried out report fewer
symptoms of burnout. As a result, the psychological environment of the personnel is somewhat influenced by
the environment of the organisation.
Safalta should have preserved the highest standards of professionalism and invested in the advancement of its
staff members as befits a company that builds itself as an educational platform.
PRODUCTS/SERVICES OF THE ORGANIZATION
Safalta is an education tutoring app that runs on a premium model, with access to content after registration,
but it does provide some extra courses which are free of cost like Couse on Computer Concepts, SSC
foundation batch, Delhi police constable, Daily Current Affairs, etc. It was launched in August 2011, offering
educational content for students for examinations in India such as IIT-JEE, NEET, SSC GD, CTET, Banking
exam, NDA-NA, NRA CET, CUET, etc.
Trending courses provided by Safalta are:

Digital Marketing Course

Graphic Designing Course

English Speaking Program

Online Digital Marketing Course

After Effects Program

Advance Excel Program

NDA Complete Batch 2023

UPSSSC PET

Delhi Police Head Constable

Safalta School

UP Police Constable Batch 2023

UPSSSC Lekhpal Target Batch 2023

CTET Detailed Batch 2023 Paper 1

CTET Detailed Batch 2023 Paper 2

SSC GD Constable Batch
Advantages of buying these courses

Live Interactive Sessions

Doubt Clearing Session

Exclusive Mock Tests

360 Degree Learning

Life Time Access

Recorded Back-Up
Students independently learn academic material and concepts by watching 20–30-minute digital animation
films on YouTube. According to Safalta, there are 1.5 million users overall, 30 million or more minutes of
watched content, 1 million or more e-books downloaded, and 10,000 or more mock tests taken.
Free eBooks on the Safalta site

Digital Marketing eBook

Digital Marketing Interview Questions eBook

Search Engine Optimization (SEO) eBook

Digital Marketing Abbreviations eBook

Current Affairs Magazine

CTET Practice eBook

NDA Mathematics eBook

UP GK One Liners

UP SI Basic Law eBook

SSC GD Hindi eBook
SWOT ANALYSIS
STRENGTHS

Due to the organization's diverse product offering, it may be possible to increase the number of
customers it serves and balance out any losses from one product area with gains from another.

A strong online presence across various social networking sites and efficient social media management
can increase the impact of favourable e-WOM and foster long-lasting relationships with customers.

A company in good financial standing and overall good health may be able to make more investments.

Having access to suppliers who provide raw materials at a lesser price can increase the effectiveness of
the firm.

The development and integration of effective IT infrastructure can boost operational effectiveness and
a better understanding of current market trends.

When a company is service-oriented, having competent and dedicated people capital can be a
significant source of competitive advantage.

When a company plans to compete internationally, workplace diversity can also be a significant
competitive advantage.

Vertical and/or horizontal integration can give companies more control over the whole value chain,
improving access to raw materials and accelerating the supply of finished goods to customers.

A company may possess a variety of intellectual property rights that make its product offers distinctive
and difficult for rivals to copy.
WEAKNESSES

The company may face environmentalist criticism for its subpar waste management procedures and
inability to incorporate sustainability into its operations.

Due to ineffective inventory management procedures, the company could become less efficient. Either
a shortfall or an overabundance of inventory may result.

A lack of cash or insufficient current assets hurts the overall performance of the business and the
liquidity situation.

A lack of funding for marketing and promotion initiatives impairs a company's capacity to grow its
clientele and promote repeat business.

A lack of understanding of the local/global market can worsen a company’s performance if less money
is spent on research and development activities.

An inefficient process of strategic decision-making results from a lack of understanding of the needs
and expectations of customers. Due to this limitation, the organisation might not be able to identify the
product/service mix's possible improvement-seeking areas.

When compared to the qualities of the product or service, the business's prices could not be seen as
reasonable. It implies that a revision to the pricing strategy is necessary.

Negative word-of-mouth about the company can spread due to bad customer service, which could
hinder corporate expansion.

Internally, shoddy project management techniques might make it more difficult for the company to
open new locations or broaden its product offering.

Low organisational commitment and excessive staff turnover can raise the cost of hiring new
employees and lower productivity within an organisation.
OPPORTUNITIES

An excellent possibility for business organisation expansion is the population's exponential increase,
especially in the existing or potential client categories.

If the business organisation has good market information, the client's changing demands, tastes, and
preferences may present an opportunity.

Innovation can be incorporated into business operations by making use of the development of new
technology to aid in the production and distribution of goods and services. Cutting-edge technology
integration can save costs, increase productivity, and speed the introduction of new products.

A rise in consumer disposable income and an expansion of the wealthy clientele presents an
opportunity to launch more upmarket goods.

The business organisation can raise money and secure financing at cheaper costs thanks to the decline
in interest rates.

As a result of shifting preferences, consumers might start favouring novel and innovative goods and
services.

New market niches and segments present business and product line expansion opportunities.

The organisation can enter the international market, target a geographically dispersed consumer base,
and boost profitability due to the eroding boundaries and growing global interconnection.

The government's subsidies and other initiatives to improve the business climate are advantageous
external environmental variables for Safalta.

As customers' lifestyles and standards improve, they use more goods and services, which opens up an
additional opportunity to promote purchases.
THREATS

It could be challenging for the company to find personnel with the appropriate skill set if there is a
shortage of skilled workers in the market.

The ability of the company to maintain and grow its customer base is impacted by the rising number of
direct and/or indirect competitors.

The state of the economy has an impact on business performance when it has an immediate impact on
consumer spending habits and purchasing power.

As inflation rises, production costs rise, and businesses' profitability is impacted.

The organisation may suffer if it lacks cultural intelligence because of globalization's pressure to work
across borders and deal with cultural diversity.

When supplied goods or services are not eco-friendly, the expanding environmental sustainability
trends pose a danger. It damages the brand's reputation in a cutthroat market and attracts unfavourable
press and condemnation from environmentalists.
FINDINGS AND DISCUSSION
The act of managing cash flows involves collecting money and keeping it under control. It is essential to the
financial stability of a firm. Business managers, corporate treasurers, and chief financial officers are
frequently in charge of overall cash management strategies, cash-related tasks, and stability analysis in the
context of corporate cash management, also known as treasury management. Various service providers may be
hired by many businesses to handle all or a portion of their cash management duties.
In any case, management executives monitor and assess cash daily, monthly, quarterly, and annually using
several crucial parameters.
The management of
1. Cash flows into and out of the firm,
2. Cash flows within the firm, and
3. Cash balances held by the firm at a certain point in time by financing deficits or investing excess cash are
the focus of cash management.
A financial management cycle might serve as a metaphor for it. Cash generated by sales must be distributed.
The excess cash needs to be invested as cheaply as possible while the deficit exists in this cycle. It also aims
to gain power and liquidity at the same time. Since cash is a company's most valuable and least productive
asset, managing it is more crucial than managing other current assets. It is important because it is utilised to
fulfil the firm's commitments.
CASH FLOW OF THE ORGANISATION
The inflow of Cash
BUSINESS
OPERATIONS
Outflow of Cash
CASH
COLLECTION
BUSINESS
OPERATIONS
PURCHASES
SALES
EMPLOYEE BENEFIT EXPENSES
RESERVE & SURPLUS
OTHER SOURCES
FINANCIAL COST
TAXATION EXPENSES
OTHER EXPENSES
IF INFLOW
IF OUTFLOW
IS MORE
IS MORE
Surplus is invested in Mutual Funds, Shares
& Bank deposit
Deficit cash is borrowed from short term loan
& cash credit
Furthermore, it can be challenging to predict cash flows, especially inflows, and there isn't always a perfect
match between the inflows and outflows of cash. Cash outflows can sometimes surpass cash inflows due to
tax, dividend, or seasonal inventory accumulation payments.
Other times, cash flows will exceed cash payments because there may be significant cash sales and fast
recovery of huge sums from debtors. Additionally, the fact that management spends a lot of time managing
cash despite it making up a small fraction of the overall current assets, makes cash management important.
Numerous advancements in financial management strategies have been made recently.
These days, it goes without saying that the company wants to handle its cash matters in a way that keeps the
cash balance at a minimum and invests the extra money in successful investment options.
The company should adopt suitable cash management procedures to address the lack of synchronisation
between cash receipts and payments and the uncertainty surrounding cash flow prediction. The business needs
to develop plans for the following
CASH MANAGEMENT HAS FOUR FACETS
 Cash planning:
To estimate a cash surplus or deficit for each period of the planning period, cash inflows and outflows
must be planned. For this, a cash budget should be created.
 Managing the cash flows:
The company should decide on efficient management. As much as feasible, the cash withdrawals
should be slowed down while the cash inflows should be expedited.
 Optimum cash level:
The company should choose the ideal level of cash holdings. The optimal level of cash balances
should be determined by balancing the costs of having too much cash and the risks of having too little.
 Investing surplus cash:
To make money, the extra cash balances should be wisely invested. The businesses should select how
to divide up these cash balances across different short-term investment alternatives, like bank deposits,
marketable securities, or lending between corporations.
MOTIVES FOR HOLDING CASH
The three reasons listed below may explain why the company has to keep cash on hand be:
1. The Transactions motive
2. The Precautionary motive
3. The Speculative motive
TRANSACTION MOTIVE:
The transaction motivation mandates that a company maintain cash on hand to continue regular operations.
The company requires cash largely to cover expenses like dividends, taxes, other operational costs, wages and
salaries, and purchases.
If currency receipts and payments were perfectly timed, that is, if sufficient cash was received at the exact
moment the payment was made, there would be no need to keep the cash. Cash payments and receipts,
however, should not always match up exactly. The company should keep some cash on hand to make the
necessary payments to be made to us during those times when cash payments exceed cash receipts. A
company may invest its funds in marketable securities for transactional purposes. Typically, the company will
invest in assets whose maturity aligns with some future payments, such as dividends or taxes. Keep in mind
that the fundamental motivation behind the transaction is to keep funds to cover anticipated bills whose due
dates do not exactly coincide with cash receipts.
PRECAUTIONARY MOTIVE:
The desire to keep funds on hand to cover potential unforeseen expenses is the precautionary motive. It offers
a safety net or buffer to endure some unanticipated crises. The cash reserve size is based on how foreseeable
cash flows are. If cash flows can be accurately predicted, less cash will be kept on hand for emergencies. The
ability of the company to borrow quickly, when necessary, also affects the quantity of precautionary cash.
Less precautionary balance is required the more quickly the company can borrow money. Cash and
marketable securities may be used to maintain the precautionary balance. Marketable securities are significant
in this context. The corporation should make an effort to profit from the funds placed aside for precautionary
reasons because it is not anticipated to generate any income. These funds should be used to buy marketable
securities that are both highly liquid and low-risk.
SPECULATIVE MOTIVE:
The speculative goal is to hold money to invest it in lucrative opportunities that might come when the value of
an asset changes. The company will hoard cash when it is anticipated that interest rates will increase and
securities prices will decline. When the interest rate is anticipated to decline, securities can be bought; the
company will profit from the ensuing decline in interest rates and rise in security prices.
The business might also make material price predictions. When material prices are anticipated to decrease, the
company postpones its material purchases and waits to make them until the prices do. Some businesses might
keep funds on hand for speculation. Business organisations don't typically speculate. So, holding cash and
marketable securities mostly serves transactional and preventative purposes.
CASH PLANNING
Cash flows are essential to a company's daily business activities. For a business to continue growing its sales
and profits, it requires cash to invest in inventory, accounts receivable, and fixed assets, and to pay operating
expenditures. The company might be producing a sufficient profit, but it could also be struggling with a cash
crunch because of its expanding needs, which could be using up cash quickly.
If a company's financial requirements are planned, its poor cash situation can be improved. A company may
occasionally have extra cash and sit on it. Such excessive monetary outflows once more. If cash planning is
used, such extra cash flows can be predicted and effectively invested. An approach for controlling and
managing cash utilisation is called cash planning. It aids in reducing the likelihood of an idle cash balance by
anticipating the firm's future cash demands and flow. Cash planning safeguards the company's financial health
by creating a projected cash statement from a projection of anticipated cash inflows and outflows for a
specific period. The predictions could be based on current operations or projected future operations. The
development of the company's overall operating plans involves the use of cash plans extensively.
Cash planning can be done daily, weekly, or monthly. Generally speaking, the length and frequency of cash
planning are influenced by the size of the business and the management style. Daily and weekly forecasts are
created by large companies. Typically, weekly and monthly predictions are created by medium-sized
businesses. Due to information scarcity and their limited operational scope, small businesses may not be able
to produce formal financial predictions.
EFFECTIVE FACTORS ON THE SIZE OF CASH BALANCE
 ACCESS TO SHORT-TERM CREDIT
The majority of businesses try to set up plans to borrow money in case of emergency demands to avoid
storing unnecessary huge sums of cash. Under such an arrangement, the company typically only pays
interest while the funds are being used.
 MARKET RATES FOR MONEY
A company might decide not to invest money if it will only yield a little return. Making the loan might
not be worth the work because the loss or gains are so modest. On the other hand, every additional
rupee will be invested if interest rates are high.
 CHANGING CASH FLOW
Some businesses routinely encounter significant fluctuations in cash flow. A company with consistent
cash flows can keep a fairly consistent cash balance.
 COMPENSATORY EQUILIBRIUM
If a business has taken out a bank loan, the loan agreement may stipulate that it always keeps a certain
amount of cash in its accounts. This called in is balancing compensation. This forces the company to
use the bank's services for a guaranteed deposit that it pays noninterest on. The bank receives payment
for its services and advice in the form of an interest-free deposit.
CASH MANAGEMENT
MANAGING COLLECTION
Quick Billing: A company can guarantee earlier reimbursement by ensuring that the invoices are prepared
and sent as soon as the goods are delivered, with no delay.
i.
Cheques are collected quickly:
Processing received cheques immediately is a crucial part of effective cash management. Banks That
Concentrate on multiple collecting centres are developed as opposed to only one at the corporate
headquarters. The goal is to reduce the amount of time between when customers mail in their
payments and when the business may use the cash, often when they are transferred to a disbursement
account at a concentration bank.
ii.
Lock-Box Method
In concentration banking, remittances are received, processed, and deposited in a bank by a collecting
centre. The lockbox system's goal is to shorten the period between the company receiving remittances
and depositing them in the bank. The business rents a local post office box and gives its bank
permission to pick up remittances from the box in each of these cities. Several times a day, the bank
picks up the mail and deposits the checks in the business's accounts.
The checks are registered and made available for pickup. Cheques are received and deposited into the
business's accounts. For collation, the checks are recorded and cleared.
A deposit slip and a lift of payments are given to the business. This technique relieves the business of
handling and depositing the checks.
CONTROL OF DISBURSEMENT
 INCREASING ACCOUNTS PAYABLE LENGTH
A company should pay its payables as slowly as it can without harming its credit rating. However, it
ought to benefit from the monetary discount offered for quick payment.
 CENTRALISED EXPENDITURE
Centralising payables into a single account, most often at the company's headquarters, is one method
for properly controlling disbursements. A company might defer payments with such a plan and use
cash for a variety of purposes. It first lengthens transit time. Second, a company will require relatively
fewer total cash holdings if it has a centralised bank account.
 BANK DRAFT
Contrary to regular checks, the draught is not cashable immediately. It must be presented to the issuer
for approval when it is presented to the issuer's bank for collection. The issuing company then deposits
the monies to cover its payments. However, suppliers favour checks. Additionally, the bank charges a
higher service fee to process them because they need special handling, which is typically done
manually.

PLAYING THE FLOT
The "payment float" is the total amount of company-issued cheques that have not yet been reimbursed
by the bank. The net float is what distinguishes "payment float" from "collection float." As a result, a
company that has a positive "net float" may issue checks even if doing so results in an ever-dwindling
account in its books. This is known as "playing the float" within the bounds where a firm can play this
game pretty safely. Therefore, managing cash becomes crucial, ensuring that neither excessive nor
insufficient cash amounts are kept.
AVOIDING CASH DEFICIT CASH INSOLVENCY:
The management should be extremely careful in achieving the intended level of cash balance while
maintaining cash inflows and outflows to meet the payment schedule and reduce money committed to cash
balances. Deficit cash balances can cause a lot of issues if the cash flow is insufficient or stagnant. One can
address a cash shortage in the following ways:
1. Make use of your credit limit.
2. Market securities should be sold.
3. The process of collecting money from clients and other debtors needs to be sped up.
4. The shortfall might be temporarily closed by transferring extra money across departments.
5. Bargain to spread out term liabilities' repayment schedules.
6. Speak with the bank about improving short-term loans.
7. Postpone paying the supplier's bill as long as you can.
8. With a bank, accounts receivable may be discounted.
9. Market surplus items.
10. It is important to control overhead costs.
11. To lessen cash outflows, cash management should take the appropriate action.
12. Delay making investments in marketable securities.
13. Cash management should make working capital financing from banks easily accessible.
UTILISATION CASH SURPLUS EXCESS CASH:
An excess or surplus cash balance is the amount of money that a firm keeps in its cash departments, invests in
short-term investments, and keeps in its current deposit account with the bank. To put it another way, excess
surplus cash is extra cash that the company needs regularly. Excessive cash balances may result in idle cash or
can cause a corporation to lose earning power if it cannot afford appealing investments. The following should
be done with any extra cash:
1. Extra money should be put into short-term investments that can be easily sold to generate the
desired amount of profit. Amounts of idle capital to be put into fixed assets for the growth,
modernization, and extension of business units to generate income.
2. The management frequently turns to the interdepartmental transfer of excess cash to avoid
insolvency or being unable to satisfy its future obligations.
3. Extra money will be utilised to pay down the company's term loan or other capital obtained at a
higher rate of interest.
4. Unused funds should be put in marketable securities that are highly liquid and low-risk.
5. Extra money should be used if interest rates are predicted to climb and security prices to decline.
FLOW STATEMENT:
Only the causes of changes in the firm's working capital position are examined in the fund’s flow statement.
Only variations in each's flow are examined in the cash flow statement. These assertions disregard changes to
the firm's overall financial resources. They conceal some important factors that greatly impact the firm's
financing situation and asset mix but have no bearing on the firm's cash or working capital status. For
instance, the finance and asset mix of the company is impacted by ordinary shares issued to acquire an asset,
such as land. Ordinary shares, for instance, will not be included in this transaction because there is no change
in cash or working capital. Working capital would be revealed in an exhaustive summary of changes in
financial condition.
The fund's flow statement or cash flow statement is extended in the statement of changes in financial
condition. Indicating changes to the firm's financial status is more detailed and instructive.
However, analysing changes in the company's working capital or cash position is still very important. Because
of this, a company may compile a thorough, complete statement of changes in financial position that takes
into account changes to the firm's cash and working capital balances.
CASH FLOW STATEMENT:
Planning for the near future can benefit from a cash flow study. A business needs enough cash flow to cover
current obligations, pay dividends to shareholders, and cover interest and other costs. The company can
anticipate future cash inflows and outflows to estimate available cash. This cash balance can be compared to
the amount of cash the company will need over the course of the quarter, and plans can then be arranged to
cover the shortfall or temporarily invest the surplus. It is helpful to analyse past cash flows to make accurate
cash flow estimates for the near future.
The reasons for changes in cash position between the dates of the two balance sheets are summed up in a
statement of changes in financial position on a cash basis, often known as the cash flow statement. It details
the origins and applications of money. Similar to the fund flow statement, the cash flow statement
concentrates on cash rather than working capital or funds. This statement analyses changes in current and noncurrent accounts to determine the cash flow.
UTILITY OF CASH FLOW ANALYSIS:
An essential financial management tool is cash flow analysis. These are its main advantages:
1) Aids in effective cash management
Analysing cash flows is useful for assessing financial strategies and liquidity. A forecasted cash flow
statement will help management correctly plan and coordinate the financial operations because cash is
the foundation of all operations. The management can determine how much money is required, where
it will come from, how much can be made, and how much can be used.
2) Promotes effective internal financial management
Information on the monies that will be available from operations is based on a cash flow analysis. This
will assist management with dividend policies, long-term debt payments, and other matters.
3) Describes the Cash's motions
The full picture of cash movement is revealed in the cash flow statement. Identifying the causes of the
cash's growth and decline is possible. The causes of the low cash balance despite high operating profits
and the high cash balance despite low earnings are revealed.
4) Indicates whether or not cash planning was successful
By comparing the planned cash flow statement with the actual cash flow statement, it is possible to
determine the level of cash planning success or failure and take the appropriate corrective action.
FUNDS FLOW STATEMENT:
The fund flow statement is the statement of changes in a financial position that is created to identify only the
sources and uses of working capital between the dates of two balance sheets. Working capital is the difference
between current assets and current liabilities. The working capital of the company determines its liquidity
condition. In addition to the financial accounts, a statement detailing changes in working capital is helpful.
CASH BUDGET
A written forecast of a company's future cash position is known as a cash budget. It forecasts, often monthly
as the budget period progresses, the cash revenues from various sources, the cash disbursements for various
purposes, and the consequent financial situation for some future periods. As a result, it serves as a formal
statement of the anticipated circular movement of cash through the company. A cash budget's typical forecast
period is one year, divided into either weekly or monthly intervals. This makes it possible to take into account
seasonal variations in cash flow.
The finance manager may create a budget for a complete year if cash flows are generally consistent. He might
have to settle with a projection that is only for the next three months if the outlook is hazy.
In contrast to the income statement, the cash budget is distinct. The projected income statement gives an
account for all sources of income to be tapped as well as for all categories of expenses incurred during a
specified period and illustrates how much profit, if any, is expected to be produced in a future period. The cash
budget displays the movement of cash.
The cash budget includes all anticipated cash inflows, including income and non-income sources like
proceeds from the sale of stocks, bonds, and fixed assets. The income statement does not include the
subsequent components. A cash budget similarly accounts for all forms of cash outflow, such as payments for
expenses accrued in past periods, forecast periods, present periods, or future periods, as well as payments for
expenses not immediately related to expenses like the purchase of fixed assets or dividend payments to
stockholders.
The income statement would not include payments related to the acquisition of fixed assets or dividend
payments. Similarly, some expenses would appear on the revenue statement but not in the cash budget.
The cash budget does not include any appropriations, such as those for depreciation and amortisation of
patents, which only appear in the expected income statement. Because of these factors, the revenue statement
and the cash budget should not be compared.
The cash budget differs from other budgets in that it is more focused on the timing of cash receipts and
disbursements than other budgets, which are more focused on the timing of actual transactions.
The cash budget consists of three parts:
i.
The forecast of cash inflows,
ii.
The forecast of cash outflows, and
iii.
The forecast of the cash balance
CASH
INFLOW
CASH
OUTFLOW
CASH BALANCE
OBJECTIVES OF CASH BUDGET
A company's cash budget is created to achieve the following goals:
1. To forecast the company's cash position over time.
2. To foresee an upcoming cash surplus or deficit.
3. To enable funding planning ahead of time. The budget assists management in making early
arrangements for bank loans or other short-term credits, preparing for the sale of securities, or making
other preparations for new funding by showing when cash will be needed.
4. To assist in choosing the best source of funding for the company's cash needs.
5. To enable proper use of extra money.
6. To keep loans, sales, investments, and working capital in an appropriate balance.
7. To exercise control over cash outlays by limiting the amount that different departments can spend.
FINDINGS
1. The organisation needed money for various purposes, including acquiring raw materials and
significant outlays for things like office management, selling, and distribution.
2. The company invests the excess cash in share and mutual fund investments with the hope of a
favourable return on investment. Some of the investment is deposited in a bank to keep the company's
liquidity.
3. The company's decreasing loan needs each year is an indication of good cash management.
4. The company demonstrates that sales of its products are a significant source of cash inflow, whilst
loans, reserves, and surplus are supporting sources.
5. The company displays a significant cash outflow related to the procurement of raw materials and
costs associated with office administration, selling, and distribution, among other things.
6. The organisation that collects borrowings, such as loans on demand, by the needs of the business
activity also demonstrates a decreasing trend of borrowing requirements.
RECOMMENDATIONS FOR IMPROVEMENT
1. The firm should use its bank balances and cash as efficiently as possible.
2. The company ought to establish a policy for the optimum investments for returns on investments
(ROI).
3. The company may only borrow money from third parties for a limited time, if required, and must
pay back the money borrowed as quickly as feasible.
4. Increasing sales of items and a portion of the profit and setting aside a portion of the profit as retail
earnings would help the company boost its cash inflow.
5. For a positive cash outflow, the company must control its manufacturing, office & administration,
selling, and distribution costs and use its resources best.
6. The company should enhance its strong liquidity position so it can swiftly and readily repay its
outside funds.
BIBLIOGRAPHY
http://www.ignited.in/I/a/231937
P. Periasamy, Financial Management, Vijay Nicole Imprints Pvt. ltd. 3rd EditionPP3.1-3.12 & 22.1-22.11
M. Y. Khan and P. K. Jain, Financial Management (Text, Problem and Cases), Tata McGraw Hill, 2ND
Edition, PP-4.2-4.7, 4.23, 4.27, 4.28.
Journals & Periodical-Fundamentals of cash management, the statement of cash flow turns 30 (the CPA
journal)
https://www.researchgate.net/publication/305877401_Corporate_cash_management_A_study_on_retail_secto
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