Reference no: EM132340139

Question

One first point I would like to highlight in the discussion that will start is the issue of cash in firms. This is a central issue for corporate finance and ever important for all categories of firms especially SMEs. Michalski (2009) correctly posits that liquid assets management decisions are complex. Firms could face cases where they have too much money tied up in the working capital, thus facing higher costs of managing these liquid assets with additional high alternative costs. Others claim that holding cash could lead into greater opportunities to increase sales and profits. All in all firms tend to hold cash for a variety of different reasons. These reasons could be anything ranging from precautionary, to speculative, transactional and intentional. Precautionary reasons have to do with the anxiety by finance managers that they might end up having not enough cash. To what extent does the you think that the availability of cash affects investment decision making?