Cash Management Paper Cash is the lifeblood of companies. Cash provides the liquidity needed to meet everyday obligations owed to suppliers and creditors and the flexibility to take advantage of new opportunities that may arise. Managing cash is a delicate issue for many firms. For businesses cash is the key to daily operations, but cash is a non-earning asset. Dollars tied up in cash could be earning higher rates of return if invested in other areas. Large corporations spend considerable time and resources in cash management; dollars are transferred back and forth between marketable securities and cash accounts that earn a higher rate of return. Negotiated credit lines serve to supplement depleted cash during periods of shortage. Short-term financing is a portal that allows firms to operate with a low cash balance. The first part of this paper will explain the various cash management techniques. The second half of the paper will address the types of short-term financing a financial manager of a firm has to choose from.
Introduction Big Drive Auto is a multistate dealer of several manufacturer’s cars and trucks. Big Drive not only sells the cars but a large part of their business is servicing the autos. This paper will address the managerial decisions that are affected by increasing interest rates and how increasing interest rates affect the cost of operating a business. The current yield curve will be discussed and what this means for Big Drive Auto’s organizational decision making. This paper will analyze how the change in interest rates can change consumer demand. In closing, some other monetary variables, such as durability, government taxes, and capital goods on hand will be explored.