| dc.description.abstract | This study was a survey of cash management approaches employed bycompanies quoted at
the Nairobi Stock Exchange.
The objectives of the study were to fmd out the cash management approaches used by firms
quoted at the Nairobi Stock Exchange, the extent to which cash management models are used
by firms quoted at the Nairobi Stock Exchange as well as to fmd out the factors that influence
the choice of cash management approaches used.
Primary data was obtained using structured questionnaires. The questionnaires had both open
ended and closed questions that were administered to all quoted companies though some did
not respond.
The data was analysed by using frequency tables, making cross tabulations to determine
relationships between various aspects of cash management cash models and performance,
Tables have been drawn to capture general trends.
The fmdings indicate that quoted companies have specific policies in the management of their
cash balances and plan for their cash balances. They have more than one planning period and
the weekly planning period iS,the most popular. Most of the firms monitor their cash balances
using .computers and some even have on line connections to their banks. Maximum,
minimum and optimum cash levels are determined in an effort to minimise the costs of
holding cash and to maximise the gains from cash balances held. The relationship between
receipts and expenditure is regarded as important as it influences the way the firms fmance
their cash balance. Receipts take the pattern arid direction of expenditure for many firms.
This could be deliberately planned so that expenditure is fmanced from internal sources
which are cheaper than external sources. However, the study also found extensive use of
short-term fmancing in the form of overdraft facilities which are used for disbursement and
cash balance replacement. Most of the quoted companies invest in marketable securities.
This is done as a way of minimising opportunity cost of holding cash. Marketable securities
ofless than 90 days are most popular.
It is unfortunate that inflation and foreign exchange risks are not given as much weight as
they should. In a country like Kenya, where inflation rates are high and foreign exchange
rates are volatile, ignoring them could result in losses. | en |
