Motives for Holding Cash Balances in a Firm: 5 Motives
The following points highlight the five main motives for holding cash balances in a firm. The motives are: 1. Transaction Motive 2. Precautionary Motive 3. Speculative Motive 4. Future Requirements 5. Compensating Balances. 1. Transaction Motive: Cash balance is required to meet the day to day transactions of business. Firms hold cash for making necessary payments for goods and services [...]