A Study on Cash Management at State Bank of India

Abstract

The significance of having sufficient cash to sustain daily business operations cannot be overstated. Almost every business entity requires a certain amount of cash to function effectively. However, the cash requirements vary among firms. The primary objective of a firm should be to maximize the wealth of its shareholders. To achieve this, the firm must generate adequate returns from its operations. Successful sales activities are crucial for earning a consistent profit. In order to generate sales, the firm needs to invest sufficient funds in current assets. Current assets are essential because sales do not instantly convert into cash. The main objectives of analysing cash management are to assess the efficiency of cash, inventories, debtors, and creditors. These objectives can be accomplished through ratio analysis, which provides insights into the efficiency or inefficiency of cash management. Based on the analysis, conclusions can be drawn that are vital for understanding the company's cash management effectiveness. Upon conducting the study, it was observed that the company has effectively utilized its cash resources. However, there is room for improvement to enhance its effectiveness further. The company maintains a normal level of cash to meet its current liabilities, indicating adherence to an average cash management policy.