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Implications for Managers in Cash and Cash Equivalents

Financial statements provide managers and others with historical information about cash. Managers must ensure that sufficient cash is available on an ongoing basis to enable the firm to meet its commitments. As in many cases,managers must be proactive, not reactive, and the historical information can help with decision making.

The management of cash begins with projecting the amount and timing of future cash flows.This enables firms to forecast their cash balances over the course of a specified time period. If positive net cash flows are expected,managers must identify profitable uses of that cash.Alternatively, if negative net cash flows are projected,managers must identify additional sources of cash. Possibilities include short-term debt, longterm debt, additional investments by owners, and the liquidation of assets. Other strategies might include attempting to speed up cash collections from customers and delaying payments to suppliers.

• Composition of Cash
• Control of Cash
• Analysis of Cash
• Implications for Managers

Current Assets Topics

• Cash and Cash Equivalents
• Marketable Securities
• Accounts Receivable
• Inventory
• Prepaid Expenses