CHAPTER ONEINTRODUCTIONBACKGROUND OF THE STUDYCash management is a means of protecting cash in organization cash is the most important current asset for operation of business. It is the basic input needed to keep the business running on a continuous deals. It is also the altimeter output expected to be realized by selling the service or product manufactured by the firm. The firm should keep sufficient cash neither more nor less shortage will disrupt the firms manufacturing operation. While excessive idle without contributing anything towards the firms profitability (Pandey I.M). Cash management involves initially the provision of sufficient cash to meet the organizations obligations. When they full down and secondly the maintenance of a sufficient cash flow to enable the organization to take the advantage of the growth and investment opportunities by committee T. C. The aim of this project is to explain in simple and clear language what management must do to have effectivecontrol over its most liquidly and important asset cash. Thus a major assignment of the financial manager is to maintain a sound cash position. Effective management and control of cash is very important to the firm because cash represent instantly available purchasing power and nearly every transaction ultimately involved the exchange of cash. An integral part of cash administration is concerned with the effective utilization of corporate fund. The planning and control of this activities is made necessary by the fact that business is cyclical in nature and a considerable amount of time, during which raw material must be purchased and wages andover head paid claps between the receipt of an order its shipment and banking of cash. An investment in cash assets is required in order to meet the company’s operational need, the uneven flow in the receipt and disbursement of funds, seasonal fluctuations and so on. Moreover, the receipt and disbursement of fund is varies on a daily bases and within the month, with a heavy cash receipt accruing at a particular time. Sophisticated cash management models recognize the uncertainty inherent in forecasting both cash inflows and outflows.

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