What is the impact of a company s monetary fund holdings that are too high or too low?

If the general enterprise is concerned, if there is a high monetary capital, then the first thing behind it may be that the enterprise is relatively liquid, or some commercial and trade companies, such as the fast-moving consumer goods industry, their monetary funds will be very large.

Control Objectives: Internal Control Objectives for Monetary Funds:

The objective of internal control is the fundamental starting point for the establishment and improvement of the internal control system of the unit.

The internal control of monetary funds should achieve the following objectives:

First, the security of monetary funds.

Through good internal control, ensure the safety of unit cash in hand to prevent theft, fraud and misappropriation.

Second, the integrity of monetary funds.

Check whether all the monetary funds received by the unit have been recorded in the account, and prevent illegal acts such as the private establishment of a "small treasury" that embezzles the income of the unit.

Third, the legitimacy of monetary funds.

Check whether the acquisition and use of monetary funds comply with national laws and regulations, and whether the procedures are complete.

Fourth, the efficiency of monetary funds.

Rational allocation of monetary funds to maximize economic benefits.

The asset scale and business scale of the listed company. The larger the total assets of the listed company, the larger the corresponding monetary funds; The more frequent the business, the more monetary assets will be.

Other factors that determine the size of a company's monetary funds:

1) The company's ability to raise funds. The company has a good reputation, and it will be relatively smooth to borrow from the bank or issue ** and bonds. The company can then appropriately reduce the amount of monetary funds it holds.

2) The company's ability to use monetary funds. The use of monetary funds also exists"Efficiency"with"Benefits"problems. The stronger the ability of a listed company to use monetary funds, the faster the turnover of funds within the company, and the need for the company to retain too much monetary funds.

3) The characteristics of the company's industry. For companies in different industries, the size of reasonable monetary funds will vary. There is some historical empirical data that investors can check through the web or statistical yearbooks.

Generally, the business is stagnant and there are no good investment projects.

Enterprises have less credit sales or short accounts receivable cycles, long procurement and payment cycles, less enterprise investment, and lower corporate dividend ratios.

It is reported that the monetary funds of enterprises refer to the assets owned by enterprises in the form of money, including cash, bank deposits and other monetary funds.

Many people are curious, is it better to have more monetary funds in a company? What does a large proportion mean? Let's take a closer look.

Corporate monetary funds.

Generally speaking, whether the amount of monetary funds of an enterprise is high or low should be compared with that of enterprises in the entire industry. It should be noted that generally speaking, more monetary funds are not always better.

If a business has too much monetary funds, it means that the business is not managing its cash properly. If a business has too little monetary funds, then there may be a certain risk of debt repayment.

Summary. A high proportion of monetary funds means that the company's funds are not used reasonably, which may have the following adverse effects on the enterprise:1

Inefficient use of funds: A large amount of funds of enterprises are not used for investment, R&D and other projects with higher returns, resulting in inefficient capital utilization and reducing the profitability of enterprises. 2.

Increased financial costs: If a business has a higher percentage of monetary funds, the costs that need to be paid will also increase. For example, bank account management fees, safe deposit box rentals, and other expenses will increase.

These additional costs can reduce the profitability of the business. 3.Increased financial risk:

A large amount of monetary funds can easily cause financial risks to enterprises. A bank deposit with a fixed interest rate may result in a risk of financial income. At the same time, market changes such as inflation may also reduce the value of a company's money.

Therefore, enterprises need to manage their funds reasonably, choose appropriate investment projects, reduce the proportion of monetary funds, improve profitability and reduce risks.

A high proportion of monetary funds means that the company's funds are not used reasonably, which may have the following adverse effects on the enterprise:1Inefficient use of funds:

A large amount of funds of enterprises are not used for investment, research and development and other projects with higher returns, resulting in low capital utilization efficiency and reducing the profitability of enterprises. 2.Increased financial costs:

If the business has a higher percentage of monetary funds, the costs that need to be paid will also increase. For example, bank account management fees, safe deposit box rentals, and other expenses will increase. This additional cost will reduce the profitability of the business.

3.Increased financial risk: A large amount of monetary funds can easily cause financial risks for enterprises.

Fixed-rate bank deposits may lead to financial income risks. At the same time, market changes such as inflation may also reduce the value of a company's money. Therefore, enterprises need to manage their funds reasonably, choose appropriate investment projects, reduce the proportion of monetary funds, improve profitability and reduce risks.

Dear, you refer to the above.

Factor: The size of the enterprise.

The characteristics of the industry, the debt structure of the enterprise, and the financing ability of the enterprise.

Motivation for holding currency:

Cairns Sakura quietly.

The theory of money demand holds that people hold money according to three motives: the trading motive, the precautionary motive, and the speculative motive.

Transactional motivation refers to the fact that individuals and businesses hold money in response to normal trading activities.

The precautionary motive refers to the holding of money in order to cope with future uncertainties.

The speculative motive refers to the holding of money in order to seize a favorable opportunity to buy a valuable **.

The main purpose of a company holding cash is to have enough money to pay off short-term debts. But short-term liabilities are those that are due to be paid within a year, not money that is due to be repaid tomorrow. In addition to cash, the company's assets also include inventory and accounts receivable.

That is, the payment received from the customer.

These are also the remnants of the debt that can be quickly cashed out and used to pay off debts.

Factor: The larger the size of the enterprise, the greater the amount of monetary funds required.

The characteristics of the industry are rock orange enterprises belonging to different industries, and there may be a large gap in the amount of monetary funds rented by Li Zao on a daily basis.

The stronger the financing ability of the enterprise, the smaller the cash holdings.

The debt structure of enterprises is a large proportion of short-term and medium-term debts, so it is necessary to maintain a relatively high amount of monetary funds.

1. Insufficient monetary capital holdings of enterprises will have a negative impact on the solvency of enterprises. Reasons:1

The company's monetary fund holdings are insufficient, and the enterprise cannot repay its debts in a timely manner, thus affecting the company's ability to repay debts. 2.The company's monetary capital holdings are insufficient, and the enterprise cannot obtain funds in a timely manner, which affects the solvency of the enterprise.

2. Solution: 1Enterprises should strengthen financial management and increase the amount of monetary funds held in order to improve their ability to repay debts.

2.Enterprises should strengthen financial management and improve the liquidity of monetary funds to improve their ability to repay debts. 3.

Enterprises should strengthen financial management and improve the efficiency of the use of monetary funds, so as to improve their ability to repay debts. Personal tip: Enterprises should strengthen financial management and improve the holding, liquidity and utilization efficiency of monetary funds to improve their solvency.

At the same time, enterprises should also strengthen financial risk management to prevent the occurrence of financial risks to ensure the solvency of enterprises.

In October 2009, the self-study exam "Financial Statement Analysis (1)" real questions and multiple-choice questions (3).

a.Enterprise scale bThe characteristics of the industry.

c.Corporate Debt Structure DEnterprise asset structure.

e.Corporate financing capabilities.

See the answer explainedCorrect Answer:abceAuthoritative analysis of famous teachers in school rent:A company's monetary holdings are determined by the following factors:

1) The size of the enterprise, (2) the characteristics of the industry, (3) the financing ability of the enterprise, and (4) the debt structure of the enterprise. See page 30 of the 2008 edition.