Every enterprise irrespective of its size and nature of business operations maintains cash balances to meet diverse business obligations in the ordinary course of business.  Usually, a firm holds appropriate levels of cash balances with the motives like transaction motive, precautionary motive and speculative motive. The management of cash is an important tool of accounting of a firm to meet the present and future cash needs, and to make use of the idle cash to generate additional revenue for the wellbeing of the firm. The primary idea behind managing appropriate levels of cash balance is to decide how much cash to be held to produce much. Therefore, it is necessary to decide on the size of investment in cash to meet the obligations of the business operation without any difficulty and stoppage of operations.  

KEYWORDS: Business Operations, Speculative Motive, Liquidity Position.