Reasons for Holding
Money
The money may earn more profit for
the organization. Therefore money must be invested but reasonable amount
of money is required to be hold for following reasons.
1. Smooth Operation of Business :- The smooth
operations of business need funds.
2. Unplanned expenditure :- There must be
sufficient fund available to meet some emergency funds requirement.
3. Opportunity of investment :- Sometime a good
investment opportunity is available at a lower rate . This opportunity
can only be availed if some liquid funds are available.
The surplus fund available after taking into
account above mentioned factor must be invested in a project which have
a positive NPV.
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