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Financial Analysis

What are the motives for Corporate Holding Cash?

September 3, 2011
1 min read

The three key motives for holding cash are:

1. The transaction motive – Cash is required to conduct ordinary business activities

2. The precautionary motive: Cash is required meet any contingencies in future. It is like a cushion or buffer to support unexpected emergency.

3. The speculative motive: Cash may be required to take advantage of opportunities.

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