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Cash management is one of the critical areas of working capital management and assumes greater significance. because it is the most liquid asset used to satisfy the firms obligations. As it does not yield anything it is considered as a sterile asset. So finance manager has to manage cash so that the firm maintains its liquidity position without jeopardizing the profitability.

Problem of keeping cash inflows accurately and absence of perfect coincidence between the inflows and outflows of cash add to the significance of cash management. in view of the above one time, a firm may experience dearth of cash because of payments like taxes dividends .Seasonal inventory etc. while at other times it may have more cash due to large cash sales and quick collections of receivables.

it is interesting to know that in real life management spends itts considerable time in managing cash which constitutes relatively a small portion of a firms current asset. That is why in recent years a number of new techniques have been evolved to minimise cash holding of the firm .

Cash Flow

Cash plays an important role in the business. A firm receives cash from sales debtors and other sources like sale of assets, investment etc. Its needs cash to make payments and pay salary , employees related expenses, rent ,interest, dividends, hire etc. Thus in a firm there is constant inflow. and outflow of cash. in Sort Cash is life blood of Business. So.Financial management to is to plan cash and maintain adequate cash balance. Cash l of cash planning and control. At the same time. its serve as a valuable tool of financial tool of financial analysis also.

Meaning of Cash

With reference to cash management the term '"cash" is used in two senses. In a narrow sense it include coins. currency notes, cheques. bank drafts held by a firm with it and the demand deposits held by it in banks. in a broader sense it also includes " near-cash assets' convert such securities or deposit . The term cash management is generally used for management of both cash and near -cash-assets.

Cash Is most important factor in financial management. Every activity in an enterprise revolves round the cash because cash is limited every enterprise and it cannot be raised as and when on likes it. So it is desirable that available cash must be managed properly.

Every firm is desirous of utilising the available cash effectively so as to accomplish the goals of the concern ie.maximisation of profit with minimum efforts. But management of cash is not as simple as it might appear in case the firm does not keep sufficient cash in hand. It shall not be in a position to meet the unexpected challenges, which will bring down its credits in the market. But if firm keep enough cash reserves to meet the expected challenges and cash

remains unutilised in  the business it will result in both if heavy amounts are blocked  for unforeseen contingencies. the company will not be  in a postion  to Carry on its day to day working efficiently.It is where the real problem of cash  management comes. ie. how much cash should be set aside for the unexpected  challenges and how much for the regular day -to  day

working  So it really not an easy problem to solve. in fact no hard and fast rule can be suggested for the problem. All that financial  management can do in this regard is to study the past records and take the necessary decision bearing in mind the present economic circumstances and the behaviour and practise of the sister concern.