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Methods to pay cash, pay out dividends, amount of cash to hold

Complete the following questions in detail:

1). What methods do firms utilize to pay cash

2). What are the advantages/disadvantages of the various methods by which firms can pay out dividends

3). How much cash should a firm hold?

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ANSWERS

NOTE: IN the OTA's own words in accordance with BM rules. Moreover, since there was no explicit instruction on the use of scholarly sources, I assumed that the questions would have to be answered in the OTA's own words

Question 1
As they say 'cash is king' and it applies both in business and personal finance. To be able to operate successfully, a firm must be able to meet its obligations as they come due. That is to have enough cash generated from its operations to say pay wages, rent and overhead. Hence, it is important that an efficient and effective cash management system be put in place. Included in this system are the methods how firms utilize pay cash.

In order to pay cash, the company must be able to generate cash. One way of being able to pay cash is to ...

Solution Summary

Methods to pay cash, pay out dividends and the amount of cash to hold are examined.

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