Sunday, March 20, 2016

Women Entrepreneurship in Nawalparasi District



Women Entrepreneurship in Nawalparasi District
Bishnu Prasad Lamsal
Associate Professor
Madhyabindu Multiple Campus
Ph. D. Scholar,
 Singhania University Pacheri Bari, Jhunjhunu (Raj.), India

Abstract
Women entrepreneurship in Nepal is a relatively new phenomenon, although women of some ethnic communities have a long tradition of being involved in micro cottage enterprises. Women comprise more than half of the total population in Nepal. This study investigated the condition of women entrepreneurship in Nawalparasi district. The study based on primary data gathered by use of a structured questionnaire from 17 women enterprises out of 43 women enterprises registered in Nawalpur Chamber of Commerce and Industries. The result highlights that the majority of the women entrepreneurs are facing the problem of marketing and lack of business knowledge. The results pointed out that majority of the women entrepreneurs have not participated in training; however they are involved in trading sector. Similarly, large percentages of women entrepreneurs in Nawalparasi need training, tax holiday and soft loan for better performance.

Keywords: Women entrepreneurship, Tax holiday, Soft loan, Poverty

1.   Introduction
Women entrepreneur can be defined as a woman or group of women who initiate, organize, and run a business enterprise. In terms of Schumpeterian concept of innovative entrepreneurs, women who innovate, imitate or adopt a business activity are called “women entrepreneurs”.
During the last few decades, recognition has been given to the importance of women's entrepreneurship as a prerequisite for household-level poverty alleviation, national economic development, and the empowerment of women (Mayoux 2001). The term 'entrepreneur' has been defined as anyone who 'undertakes the organization and management of an enterprise involving innovations, independence and risk, as well as the opportunity for profit. (Timmons and Spinelli 2006). Innovation enables and entrepreneur to venture into new technology, products, and markets, while independence and risk-taking is required in every stage of the business from start-up to expansion (Ming-Yen 2007).
Development of women entrepreneurs in Asian developing countries has also a tremendous potential in empowering women and transforming society in the region. Yet in many countries, especially where the level of economic development, reflected by the level of income per capita and the degree of industrialization, is still low, this potential remains largely untapped. For instance, the less than 10% of the entrepreneurs in South Asia, comprising Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, being women Sinhal (2005). Within the Asian region, more attention has been given (and hence more literature is available) to South Asia (e.g. India, Pakistan, Nepal, Bangladesh) for two main obvious facts: seriousness of poverty and socially, politically and economically suppressed women. This is also the motivation for many other women study scholars such as Das(2000), Dhameja et al. (2002), Raju (2000), Sasikumar (2000), Sharma and Dhameja (2002) who have also focused their research in this part of Asia.
The concept of entrepreneurship in Nepal is of recent origin. It is only in recent years that it has received a nation-wide attention. The concept has been developed to shift the nation's agricultural production, occupation to manufacturing occupation. Population growth and unemployed people, who are dependent on agriculture should be shifted to other areas from agriculture. For the fulfillment of this employment needs to be created in manufacturing sector which is one of the components of entrepreneurship.
In this way the history of entrepreneurship programme is very short in Nepal. The real history starts with the Industrial Service Centre (ISC) where 18 potential entrepreneurs were trained in 1975 (CEDA, 19978). Government of Nepal via the Department of Cottage and Village Industry (DCVI) initiated such types of training programme to motivate and encourage the people mostly living in rural areas, so that they could establish cottage and small-scale enterprises. Sometime in 1981/82, with the joint efforts of Bhaktapur Development Project (BDP) and DCVI, two training programmes were conducted to train ten and eighteen participants respectively. During the period, 1980 to 1983 DCVI run 38 Entrepreneurship Development Programme (EDP) training programmers in 38 districts to promote the rural economy through entrepreneurship. However, despite the increase in the number of programmes, the participation of women in the Entrepreneurship Development Programmes was very limited. Moreover there was no any women specific training programme like the women entrepreneurship development.
In context of Nawalparasi district, it lies between 26.120 north to 27.470north latitude and 85.250 east to 86.360 longitude with the area of 2,01,214 hectors. The district is situated in a height of 1936 meters from the sea level and the climate is tropical monsoon and warm temperature. The temperature can reach up to 420c. in summer and in winter it reach up to 50c.. Similarly, the main agriculture products of this district are rice, wheat and sugar-cane. There are 57 village development committee and 7 municipalities and also 11 VDCs are situated in Buffer Zone Area of Chitwan National Park.
Economic development cannot undervalue the contribution of women from the women productivity point of view. The major shift in national economy from the agriculture sector as well as none agriculture sector has realized the importance of entrepreneurship development especially women's status. Hence it is useful to examine women entrepreneurship development in Nawalparasi district, how far it has been successful to achieve the goal should be central theme of the present work.

2.      Objectives of the study
The major issue of this study is what is the access of women in developing entrepreneurship and what are the problems faced by them in this area. Hence, the objectives of this study is to access the women entrepreneurship development and the problem faced by them in Nawalparasi district. More specifically this research investigates the involvement of women in entrepreneurship development and their problem to serve in the current environmental condition.

3.      Research Design and Methodology
The word population is used in statistics denotes the aggregate from which the sample is to be taken. Under the population survey method, data are collected for each and every unit of the population or universe, which is the complete set of items, the interest in any particular situation. There are 43 enterprises operating and registered in Nawalpur Chamber of Commerce and Industry.  These are the population of the study. Out of them, only seventeen women enterprises will be selected as sample using judgmental basis. The primary data has been used in this study. The primary source is one that collects the data from personal interview, questionnaire and observation method and presents it in a systematic way.
4.      Analysis and findings
a)     Types of enterprises
The women entrepreneur who involved in different types of business, at Nawalparasi district they has registered their business in Nawalpur Chamber of Commerce and Industry are tabulated below:
Table 1  Types of enterprises
Description
No. of enterprise
Percent
General stores
16
37.21
Fancy
5
11.63
Cosmetic and beauty parlors
5
11.63
Stationary
4
9.30
Electrical and electronic
3
6.98
Petroleum
2
4.65
Others
8
18.60
Total
43
100
From the table 1, it can be noticed that among the total 43 enterprises operated by women entrepreneurs at Nawalparasi district, 16 women entrepreneurs have been doing general stores; it represents 37.21 percent in total enterprises. Similarly, remaining enterprises operating by different women entrepreneurs, who consist of fancy, cosmetic and beauty parlors, stationary, electrical and electronic, petroleum and others. Thus, it can be explained here that large number of women entrepreneurs are running general stores.
b)     Training Participation
Knowledge as well as skill is also the most important components of the entrepreneur to establish and to run the business smoothly. To get the knowledge about the venture training plays vital role for successful operation. The women entrepreneurs of the Nawalparasi district who have taken part in training programme demonstrate by the following table.
Table 2 Training participated by the entrepreneur
Description
No. of entrepreneurs
Percent
Participated
5
29.41
Non-participated
12
70.59
Total
17
100
As per the table 2, only 29.41% of women entrepreneurs have taken part in training programme for their skill development. Majority of the women entrepreneurs of Nawalparasi district, i.e. 70.59 percent have not got knowledge and skill through training programme.
c)      Problem faced by the owner
In context of social, cultural and economic environment of Nepalese society, women faced many problems to establish and run the business smoothly. Similarly the women entrepreneurs in Nawalparasi district have some obstacles and problems in their own way of entrepreneurship development. As per the acquired data, the related problems are presented in the following table:
Table 3 Problem faced by the owner
Description
No. of entrepreneurs
Percent
Lack of business knowledge
13
29.55
Marketing problem
14
31.82
Social, economic problem
5
11.36
Collection of fund
6
13.64
Achievement of raw materials
1
2.27
Legal problem
4
9.09
Family problem
1
2.27
Total
44
100
Table 3 presents the different kinds of problems faced by owner of the concerned entrepreneurs. There are 14 (31.82%) owners who faced marketing problem. The marketing problem is created due to lack of customer order, unhealthy competition in the competitive environment as well as lack of sufficient supply of raw materials to produce the product. Whereas 13 (29.55%) owners faced the lack of business knowledge. On the other hand, another major problem faced by entrepreneurs are collection of fund and socio-economic problem. It is concern to the insufficient available of funds for working capital as well as timely payment of operating expenses.
d)     Facility needed for better performance
Women entrepreneurs can also contribute a great extend to the nation if they have adequate knowledge and proper facilities for their entrepreneurship development. The information collected from the women entrepreneurs of the women entrepreneurs of Nawalparasi district whom need the different kinds of facilities are presented in the table 4.
Table 4 Facility needed for better performance
Facilities
No. of entrepreneurs
Percent
Soft loan
11
20.75
Training
16
30.19
Tax holiday
16
30.19
Skilled labour
10
18.87
Total
53
100
According to table 4, 16 entrepreneurs need training for the better performance of their venture. It shows that 30.19 percent entrepreneurs can shows better performance if they are trained to increase their skill and performance. Similarly, the same percentage of women entrepreneurs need tax holiday for their additional performance. If entrepreneur is provided the facility of tax holiday, they can perform well to develop their entrepreneurship. On the other hand, 11 entrepreneurs or 20.75 percent of total entrepreneurs need soft loan and 18.87 percent of total entrepreneurs need skilled labour for the better performance.
5.      Summary and Conclusion
In Nawalparasi district, most of the women entrepreneurs are involved in general stores trading-based enterprises whereas lest number of women have been involving in manufacturing enterprises. Among the total number of owner, only 5 or 29.41 percent owners had taken part in training to develop their skill and knowledge.
The women entrepreneurs of Nawalparasi district have faced many problems to run the business smoothly. Among the different problems most of the entrepreneurs have faced marketing problem and lack of business knowledge. So that it reflects an important considerable thing is that if they are provided to do their business without these problems, they can do better activities in the field of entrepreneurship so that it really contributes a lot to the interest of society and the nation. Despite those problems, they have problems to solve i.e. collection of fund, socio-economic, legal problem.
The entrepreneurs of Nawalparasi district are not running business facing the different problems but also insufficient facilities available them. If they are provided necessary facilities to promote their profession, they can perform effectively and efficiently. As a result current male entrepreneurs and potential male entrepreneurs have to learn from the women entrepreneurs. For this, to promote it is essential training, tax holiday and soft loan are the vital facility, which is needed to the women entrepreneurs. If the facility of soft loan is provided to them, they can update their enterprise in terms of productivity and effectiveness.
To promote women entrepreneurs, they have to provide many facilities not only from the government institution but also from the social and family. They have to be provided support, courage and arrange co-ordination in terms of economic strength, social status, firms' infrastructure, and environment, has to provide low interest rate loan even zero percent, arrange training facility for untrained and potential entrepreneurs. On the other hand, the government has to take necessary steps to promote women entrepreneur in marketing sector, economic sector as well as management of enterprises and to develop the skill of the existing and potential women entrepreneurs.

References:
Bushell, B. (2008). Women entrepreneurship in Nepal. Gender and Development.
CEDA. (Volume 3, 1997). The Status of Women in Nepal. Kathmandu.
Das, D. (2000). Problems faced by women entrepreneurs' in K. Sasikumar (ed.). Women Entrepreneurship.
Dhameja, S. B. (2002). Problems and constraints of women entrepreneurship in D.D. Sharma and S.K. Dhameja (eds.). Women and Rural Entrepreneurship.
G., R. (2000). Women entrepreneurship development through DWCRA in K. Sasikumar (ed). Women Entrepreneurship.
Istanbul, ,. T. (2004). Women's entrepreneurship: Issues and policies. Organization for Economic Co-operation and Development.
Mayous, L. (2001). Jobs, cender and small enterprises: Getting the policy environment right. Geneva:ILO.
Mayoux, L. (2001). Jobs, Gender and small enterprises:Getting the policy environment right.
Ming-Yen, W. (2007). Theorising a framework of factors influencing performance of women entreprenerus in Mlalysis'. Journal of Asia Entrepreneurship and Sustainability, 3 (2).
Sasikumar, K. (2000). Women Entrepreneurship. New Delhi: Vikash Publishing House.
Sharma, D. D. and S.K. Dhameja. (2002). Women and Rural Entrepreneruship.Chandigarh: Abhishek Publication.
Sinhal, S. (2005). Developing women entrepreneurs in South Asia: Issus, initiatives and experiences', ST/ESCAP/2401. Trade and Investment Division.
Tambunan, T. (2009). Women entrepreneurs in micro, small. University of New South Wales at ADFA.
Timmons, J. a. (2006). Entrepreneurship for the 21st Century. New Venture Creation.

Tuladhar, J. (1996). Factor affecting women entrepreneurship in small and college industries in Nepal. International Labour Organization and Swedish International

Sunday, September 13, 2015

Thesis Proposal for Ph. D.


Chapter 1 : Introduction to the Study

General Background:
The process of collecting, managing and investing (short-term) cash is the key component of ensuring a company's financial stability and solvency. Frequently corporate treasurers or a business manager is responsible for overall cash management. Successful cash management involves not only avoiding insolvency (and therefore bankruptcy), but also reducing days in account receivables (AR), increasing collection rates, selecting appropriate short-term investment vehicles, and increasing days cash on hand all in order to improve a company's overall financial profitability. Successfully managing cash is an essential skill for small business developers because they typically have less access to affordable credit and have a significant amount of upfront costs they need to manage while waiting for receivables. Wisely managing cash enables a company to meet unexpected expenses in addition to handling regularly-occurring events like payroll.

Cash management is the management of the cash balances of a concern in such a manner as to maximize the availability of cash not invested in fixed assets or inventories and to avoid the risk of insolvency. According to Keynes there are three motives for holding cash: the transactions motive, the precautionary motive, and the speculative motive. The most useful technique of cash management is the cash budget.

According to Kojo Menyah (2005) recent developments in computer communications technology, especially the internet, globalization of banking, reduction in regulatory barriers in the major economies, and the marketing of innovative products by global and niche banks appear to have made an impact on the practice of international cash management. This paper reviews developments in the theory and practice of international cash management. From the theoretical angle, we out line models for the determination of optimal cash balances in a multi-national setting as well as models of optimal multi-lateral netting and international funds transfer and their implications for short- term borrowing, investment and hedging decisions. We then analyze changes in the practice of international cash management through the review of survey re -search and case studies. To this end, we high light how developments in telecommunications and computer technology, the globalization of banking, product development, reduction in regulatory barriers and the introduction of the single European currency have changed and continue to change regional and global cash management. The paper ends with suggestions for future research.

Davidson (1992) defined cash management as a term which refers to the collection concentration and disbursement of cash. It encompasses a company’s level of liquidity, management of cash balance and short term strategies. Pindado (2004) also defines cash management as part of working capital that makes up the optimal level needed by a company. Bort (2004) noted that, cash management is of importance for both new and growing businesses. Companies may suffer from cash flow problems because of lack of margin of safety in case of anticipated expenses such that they experience problems in finding the funds for innovation or expansion. Weak cash flow makes it difficult to hire and retain good employees (Beranek, 2000). Ross (2000) says that, it is only natural that major business expenses are incurred in the production of goods or the provision of services. In most cases, a business incurs such expenses before the corresponding payment is received from customers. In addition, employee salaries and other expenses drain considerable funds from most business. These make effective cash management an essential part of the business financial planning. According to Bort (2004) cash is the lifeblood of the business. The key to successful cash management lies in tabulating realistic projections, monitoring collections and disbursements, establishing effective billing and collection measures, and adhering to budgetary parameters because cash flow can be a problem to the business organization.

Cash collection systems aim to reduce the time it takes to collect the cash that is owed to a firm. Some of the sources of time delays are mail float, processing float, and bank float. Obviously, an envelope mailed by a customer containing payment to a supplier firm does not arrive at its destination instantly. Likewise, the payment is not processed and deposited into a bank account the moment it is received by the supplier firm. And finally, when the payment is deposited in the bank account oftentimes the bank does not give immediate availability to the funds. These three "floats" are time delays that add up quickly, and they can force struggling or new firms to find other sources of cash to pay their bills.

Cash management attempts, among other things, to decrease the length and impact of these "float" periods. A collection receipt  point closer to the customer—perhaps with an outside third-party vendor to receive, process, and deposit the payment (check) is one way to speed up the collection. The effectiveness of this method depends on the location of the customer; the size and schedule of their payments; the firm's method of collecting payment; the costs of processing payments; the time delays involved for mail, processing, and banking; and the prevailing interest rate that can be earned on excess funds. The most important element in ensuring good cash flow from customers, however, is establishing strong billing and collection practices.

Once the money has been collected, most firms then proceed to concentrate the cash into one center. The rationale for such a move is to have complete control of the cash and to provide greater investment opportunities with larger sums of money available as surplus. There are numerous mechanisms that can be employed to concentrate the cash, such as wire transfers, automated clearing house (ACH) transfers, and checks. The tradeoff is between cost and time.

Another aspect of cash management knows a company's optimal cash balance. There are a number of methods that try to determine this magical cash balance, which is the precise amount needed to minimize costs yet provide adequate liquidity to ensure bills are paid on time (hopefully with something left over for emergency purposes). One of the first steps in managing the cash balance is measuring liquidity, or the amount of money on hand to meet current obligations. There are numerous ways to measure this, including: the Cash to Total Assets ratio, the Current ratio (current assets divided by current liabilities), the Quick ratio (current assets less inventory, divided by current liabilities), and the Net Liquid Balance (cash plus marketable securities less short-term notes payable, divided by total assets). The higher the number generated by the liquidity measure, the greater the liquidity and vice versa. However, there is a tradeoff between liquidity and profitability which discourages firms from having excessive liquidity.

Statement of the Problem
Inefficient cash management can be very harmful to business. More often than not, it is the improper management of cash that has caused businesses to fail. Effective cash management is therefore a necessity for businesses. Companies heavily rely on knowing their cash position to manage working capital requirements such as ordering inventory, raw material, or acquisitions/expansion program, for which they need a clear idea of how much cash is required, and when. This is enabled by efficient cash management.
Holland et. al. (1994) investigated cash management practices in Motorola and found that the company had meshed part of its organization and information systems with that of Citi bank to strengthen Motorola’s cash management system. Also, Cowan (2000) observes that both the US and European companies are now using Shared Service Centers (SSC) to rationalize their cash management functions. The author provided General Electric and Siemens as some of the Western companies that have adopted the SSC to facilitate the management of cash. Dimitriadis (2000) presented the case of AstraZeneca to illustrate how the cash management netting system has been enhanced through information technology.


It is widely acknowledging that sufficient amount of cash collection doesn't secure the sound status of any institution. Similarly, positive cash flow doesn't indicate the profitability and vice-versa. Nepalese enterprises have been identified as a basic tool for rural development.  They have taken a turn for the better sense in the past decades.  The prospect for this decade and subsequence decade are bright.  To achieve this depends solely on the proper management of Nepalese enterprises, taking up to the challenge from internal sourcing of solution. Therefore, in order to carry out this study titled “Cash Management Practices in Nepalese Enterprises” attempts the following research questions:-
i.        What is the structure and utilization position of cash in the selected enterprises?
ii. Which variables/factors are responsible for the determination of cash holdings in Nepalese Enterprises?
iii.    What is the practice of cash management in the Nepalese enterprises regarding cash, inventory and receivables?
iv.  What are the effects of poor cash management in Nepalese enterprises?
v.     What is the effect of cash management in the performance of Nepalese Enterprises?

Significance of the study
It is expected that this study would be of vital benefit to a member of entrepreneurs, businessmen and organizations in the following ways:-
i.        This study should provide its numerous readers with a clear insight into the cash management practices in Nepalese enterprises.
ii.      This study shall create awareness of the importance of proper cash management among Nepalese enterprises.
iii.    It equally provides a basis for further studies into other aspect of cash utilization in Nepalese enterprises.
iv.    The study will benefit the businessmen, entrepreneurs and organizations in particular since it would expose them to the possible aid techniques of cash management.
v.      It is also expected that business consultants would benefit from this study.  Since it would give them a clear insight into the efficient utilization of limited resources of Nepalese enterprises.

Objectives of the Study
      The major objective of this study is to examine the cash management practices in Nepalese enterprises. The specific objectives are as follows:
·         To analyze the effect of cash management on the corporate profitability.
·         To examine the status of corporate cash management and ascertain the factors affecting thereof.
·         To compare the performance of cash management in the public and private sector enterprises.
·         To determine the cash management practices of Nepalese enterprises.
·         To develop and recommend cash management model suitable for Nepalese enterprises.


Statement of Hypotheses
     From the theoretical framework mentioned above, the following null hypotheses will be proposed to be tested in this research work:
·         The corporate profitability of Nepalese firms is affected by size of investment in cash.
·         The size of cash holdings is affected by growth opportunities, size of the firm, opportunity cost (interest), cash flow, long term debt, leverage, financial distress and bank debt.


Limitation of the Study
Although efforts will be made to make the study more realistic, practicable and informational for all the people, the study will be suffered from number of limitations. Some of the limitations will be as follows:
  • This study is mainly based on secondary data, which are collected from various sources. The data may or may not far from limitations because the official provides an audited data but they may hide the original data to keep secrecy.
  • Limited resources are another limitation to make the thesis practicable and realistic.
  • This study covers only ten years data from 2001/02 to 2011/12.
  • All the financial data are in round figure.
  • This study mainly has focused the cash management aspects of Nepalese enterprises.
  • The study has given main emphasis to the financial section but there may be weaknesses in other field too.
  • The conclusion and recommendations of the study quite relevant in Nepalese context however, it may or may not be applicable in terms of universal contex.




Chapter 2 : Literature Review

A review of the literature is an essential part of any academic research project. The review is a careful examination of a body of literature pointing toward the answer to your research question. Literature reviewed typically includes scholarly journals, scholarly books, authoritative databases and primary sources. Sometimes it includes newspapers, magazines, other books, films, and audio and video tapes, and other secondary sources.

Primary sources are the origin of information under study, fundamental documents relating to a particular subject or idea. Often they are firsthand accounts written by a witness or researcher at the time of an event or discovery. These may be accessible as physical publications, as publications in electronic databases, or on the Internet.

Secondary sources are documents or recordings that relate to or discuss information originally presented elsewhere. These, too may be accessible as physical objects or electronically in databases or on the Internet. All good research and writing is guided by a review of the relevant literature. Literature review will be the mechanism by which the particular research is viewed as a cumulative process. That makes it an integral component of the scientific process.

According to (Davidson et. al, 1999), cash is any medium of exchange, which is immediately negotiable. It must be free of restriction for any business purpose. Cash has to meet the prime requirements of general acceptability and availability for instant use in purchasing and payment of debt. Acceptability to a bank for deposit is a common test applied to cash items. This is a process of Planning, controlling, and accounting for cash transactions and cash balances. It is channeling available cash into expenditures that enhance productivity directly or indirectly.

In addition, Cash is ready money in the bank or in the business. It is not inventory, it is not accounts receivable (what you are owed), and it is not a property. These might be converted to cash at some point in time, but it takes cash on hand or in the bank to pay suppliers, to pay the rent, and to meet the payroll. Profit growth does not necessarily mean more cash. (Davidson et al, 1999)

Cash is the money which a firm can disburse immediately without any restriction. The term cash includes coins, currency and cheques held by the firm, and balances in its bank accounts. Sometimes near-cash items, such as marketable securities or bank time's deposits, are also included in cash. The basic characteristic of near-cash assets is that they can readily be converted into cash. Generally, when a firm has excess cash, it invests it in marketable securities. This kind of investment contributes some profit to the firm. (Hampton, 2001)

 Objectives of Cash Management
Cash plays a crucial role in a company’s operation. It is used to pay wages and salaries, trade debts, taxes and dividends. It not only enables the company to promptly pay its creditors and suppliers so as to foster good relations but also lets the company take advantage of favorable business opportunities. Most importantly, it keeps the company liquid and prevents it from insolvency or bankruptcy.
It is said in an academic literature that companies hold cash for the following three motives:
(i)      Transaction motive: As mentioned earlier, cash is used to pay bills, especially when disbursements are greater than cash receipts from business. This is the most important reason for keeping cash.
(ii)     Precautionary motive: Cash is used for safety reasons as a financial reserve to meet unexpected demand, for example, an unexpected delay in collection of accounts receivable or a sudden increase in costs of materials.
(iii)    Speculative motive: There may be unexpected profitable opportunities when doing businesses, like speculative interest rate movements. If a company has excess cash on hand, it may take advantage of such opportunities.

The objectives of cash management are therefore two-fold: (i) to have sufficient cash for operation in order to maintain liquidity; and (ii) to invest excess cash for a return. Cash management is not easy. Cash inflows from receipts do not perfectly coincide with the cash outflows for disbursements. Further, some businesses are seasonable in nature so that cash inflows and outflows fluctuate throughout the year. The company therefore needs to manage its cash properly. One of the tools it can use to do this is, to prepare a cash budget.

Cash Budget
A cash budget is a statement showing the estimated cash inflows and outflows over the planning horizon. Companies can prepare a cash budget on a quarterly, monthly, weekly or even daily basis. The ultimate purpose is to identify the net cash position of the company in the future, that is, whether there is any cash surplus or deficit. Preparation of a cash budget is an indication of good planning. If such a budget is not prepared, the company runs the risk that if unfortunately it is in sudden need of cash, there may be insufficient time for the company to search for alternative source of financing, forcing it to accept funding which is more expensive. After identifying the net cash position of the company in the future, the next question is then how the company manages its cash surplus or deficit.

           Cash Management Models
According to (Davidson et. al, 1992) Cash management has four major functions; determination of minimum cash balances, effective borrowing, advantageous investment of excess cash, and acceleration of cash flow. The minimum cash balance is established by taking into consideration the basic safety cushion needed, minimum bank balance requirements, and the rate of daily cash collections and disbursements. Cash balances should be maintained at the lowest practical minimum because excess cash earns nothing and loses purchasing power in period of rising prices (Davidson et al, 1992). The minimum cash balance should be the basic liquidity cushion needed taking into consideration the rate of daily cash collections and disbursements. The average cash balance (size of demand deposit) tentatively determined can be tested against industry standard by use of the ration of the average cash balance to total operating expenditures for the year. (Davidson et. al, 1992). Cash management has four major functions; determination of minimum cash balances, effective borrowing, advantageous investment of excess cash, and acceleration of cash flow.

According to Davidson (1992:13-12), The minimum cash balance is established by taking into consideration the basic safety cushion needed, minimum bank balance requirements, and the rate of daily cash collections and disbursements. Cash balances should be maintained at the lowest practical minimum because excess cash earns nothing and loses purchasing power in period of rising prices.

Miller-Orr Model
In 1966 Metron Miller and Daniel Orr developed a cash management model that solves for optimal target cash balance about which the cash balance fluctuates until it reaches an upper or lower limit. If the upper limit is reached investment securities are bought bringing the cash balance down to the target again. If the lower limit is reached investment securities are sold bringing the cash balance up to the target (Gallagher and Andrew, (2003).

In order to manage its cash balance, the company can employ a mathematical model, one of which is the Miller-Orr model. The Miller-Orr model helps the company to meet its cash requirements at the lowest possible cost by placing upper and lower limits on cash balances. The operation of the model is as follows:
(i)      A company should have its desired cash level, an upper limit and lower limit on cash balances.
(ii)     When the cash balance reaches the upper limit, the company has too much cash. It then should use its cash to buy marketable securities in order to bring the cash balance back to its desired cash level.
(iii)    When the cash balance hits the lower limit, the company lacks cash. It then sells its securities in order to bring the cash balance back to its desired cash level.
(iv)    If the cash balance lies between the upper and lower limits, there will be no transaction in securities.

The Miller-Orr model increases its practicability by incorporating an assumption that cash balances randomly fluctuate and therefore are uncertain. The formula in determining the desired cash level is as follows:
Z          = 
Where
Z = Target cash balance
b = Transaction cost of buying or selling short-term investment securities
σ2 = Variance of net daily cash flows
i = Daily rate of return on short – term investment securities
L = Lower limit to be maintained in the cash account

If the transaction cost is higher or cash flows show greater fluctuations, then the upper limit and lower limit will be far off each other. As the interest rate increases, the limits will come closer. There is an inverse relation between Z and the interest rate. The upper control limit is three times above the lower control limits and the return point lies between the upper and lower limits. Hence,
Upper Limit = 3Z – 2L
Average Cash Balance =
However, though these are commonly available models their practical efficacy is still questionable due to the number of assumptions involved in each model.


Baumol Model
Baumol model is an economic model that determines the optimal cash balance by using economic order quantity concepts of inventory management. Baumol makes two major assumptions regarding the behavior of cash balances;
·         Expenditures occur continuously.
·         Receipts, or cash in-flows, come in lump sums at periodic intervals.
The purpose of this model is to determine the minimum cost amount of cash obtain by converting securities to cash. The total cost has two elements namely.

Conversion cost (b) : It is the cost of converting marketable securities into cash. It includes the fixed cost of placing and receiving an order for cash in the amount conversion size. It includes the cost of communication the necessity to transfer funds to the cash account, associated paperwork costs, and a cost of any follow up action.

Opportunity cost (i) : It is the cost of opportunity lost. Opportunity cost is the interest earnings per rupees given up during a specified time period as a result of holding funds in a non-interest earning cash account rather than having them invested in interest earning marketable securities.

Mathematically, the optimal conversion size (C) which minimizes total cost can be found from the following equation:

C         =                                     
Where,
C = Optimal size of the cash transfer
T = Total cash usage for the period of time involved
b = Cost of transaction in the purchase or sale of marketable securities.
i = Interest rate on marketable securities.


         Cash Management Concepts
Waltson and Head (2007) explained Cash management as the concept which is concerned with optimizing the amount of cash available, maximizing the interest earned by spare funds not required immediately and reducing losses caused by delays in the transmission of funds.

According to Zimmerer et. al. (2008) cash management is the process of forecasting, collecting, disbursing, investing, and planning for cash a company needs to operate smoothly. They further added that cash management is a vital task because it is the most important yet least productive asset that a small business owns. A business must have enough cash to meet its obligations or it will be declared bankrupt. Creditors, employees and lenders expect to be paid on time and cash is the required medium of exchange.

However, some firm retain an excessive amount of cash to meet any unexpected circumstances that might arise. These dormant cash have an income-earning potential that owners are ignoring and this restricts a firm’s growth and lowers its profitability. Investing cash, even for a short time, can add to company’s earning. Proper cash management permits the owner to adequately meet cash demands of the business, avoid retaining unnecessarily large cash balances and stretch the profit generating power of each dollar the business owns (Zimmerer et. al, 2008).

Cash management is particularly important for new and growing businesses. (Jeffrey P. Davidson et. al, 1992) indicated in their book that cash flow can be a problem even when a small business has numerous clients, offers a superior product to its customers, and enjoys a sterling reputation in its industry.

Companies suffering from cash flow problems have no margin of safety in case of unanticipated expenses. They also may experience trouble in finding the funds for innovation or expansion. Finally, poor cash flow makes it difficult to hire and retain good employees.

Westerfield et. al, 1999 noted that it is important to distinguish between true cash management and a more general subject of liquidity management. The distinction is a source of confusion because the word cash is used in practice in two different ways.
First, it has its literal meanings, actual cash on hand. However, financial managers frequently use the word to describe a firm's holdings of cash along with its marketable securities, and marketable securities are sometimes called cash equivalents or near cash. In our distinction between liquidity management and cash management is straightforward, they added.

Liquidity management concerns the optima quantity for liquid asset management policies. Cash management is much more closely related to optimizing mechanisms for collecting and disbursing cash, and it's this subject that we primarily focus on this chapter.

         Empirical evidence (Early study   1980 – 1999)
In late 1980s authors played a great contribution in the concept of cash management. Ross et al (1988:619) explained that cash management involves three steps;
·         Determining the appropriate target cash balance
·         Collecting and disbursing cash efficiently
·         Investing “excess cash ‘in marketable securities

Determining the appropriate cash target balance involves an assessment of the tradeoff between the benefits and cost of liquidity. The benefit of holding cash is the convenience it gives the firm. A firm should increase its holding cash until its present value from doing so is zero. The incremental liquid value of cash should decline as more of it is held.
After the optimal amount of liquidity is determined, the firm must establish procedures so that collections and disbursement of cash are done so efficiently as possible. This usually reduces the dictum, “collect early and pay late’.

Firms must invest temporarily ideal cash in short-term marketable securities. These securities can be bought and sold in the ‘Money market’. Money market securities have very little default risk and are highly marketable. In this part some related research and articles that was conducted during the period of 1980 to 1999.

Key indicators in cash management

Without adequate cash flow, a firm can become technically insolvent even though assets far out way the liabilities. To reduce the chances for a firm becoming technically insolvent, the following parameters have been recommended to be employed in evaluating the effectiveness of a cash management system. This includes:
·         Cash conversion cycle
·         Operation cash flows
·         Increase of decrease in cash
·         Liquidity flow index


Cash Conversion Cycle
This is the time interval between actual cash payment/expenditure for the purchase of productive/operational resources and the ultimate collection of cash from the sales of products/services. The cash conversion cycle (CCC) provides a valid alternative for measuring company liquidity. The longer the time taken to get back the money paid out, the more the likely hood the organization is to face technical insolvency and vice versa.

Operational Cash Flows
Cash flows from operations are the amount of cash a firm generates in a measured time from its operation. Various methods are used to determine the amount of operating cash flow. The prevalent methods use the income statement and the balance sheet to prepare the cash flow statement (also called statement of sources and application of funds). (Kasilo, 1997).

Positive cash flows indicate how much cash the organization has generated from operations during the financial year. Negative cash flows indicate how much additional cash has been used to support the operations during the same period. Usually, a firm with negative cash flow from operations is unable to finance its operations. De facto, it is consuming cash flows rather than generating them. It becomes prone to technical insolvency problems and it may go bankruptcy. (Kasilo op cit: 30, Vause and Woodward op cit: 99)

Increase or Decrease in Cash
A corporation’s cash flow statement shows whether the firm has increase or decreases its cash during the period for which the statement refers. Cautiously a decrease can be indicative of how unsatisfactory the firms operations have been during the year and vice versa. Since profits are not cash, a firm may realize profits but still be technically insolvent (Kasilo, op cit: 31, Vause and Woodward, op cit: 95).

If cash flows are generated a firm may remain in business for several years while still making losses. Usually, with meticulously handled double entry account system, the decrease or increase in cash is simply the difference between opening cash balance and the closing balance.

Liquidity Flow Index (LFI)
The LIF indicates the relationship between the amount of cash that will be available for meeting the obligations and the amount of cash required to meet such obligation during the same period. It is cash budget’s ratio of operating cash influence to the required cash outflows for a particular period.

Maintaining liquidity may add value to a firm. A firm that faces variable demand can add value by maintaining liquidity to permit it operating flexibly since changes in operating levels can be more expensive than changes in liquidity or working capital.


 Empirical evidence (Recent study 2000 – 2012)
Though in late 1990s some development and discussions had been advanced, yet contributions kept on increasing from that era then. In this research some research and articles that was conducted during the period of 2000 to 2012.

Public Sector Cash Management
Governments are accountable for the efficient, effective and ethical use and management of public resources. Good cash management is an important and integral component of this accountability function and is an established business practice in all successful, high performance organizations.

According to study conducted by Amani (2005) on the causes of collapse of Public Corporations in Tanzania, fact findings revealed that finance (cash) Management in Tanzania had been regulated through the Exchequer and Audit Ordnance of 1961 and provisions set out in Chapter 7 of the Constitution. The provisions outlined Financial Orders which form the basis for financial regulation and administrative procedures. Financial Orders had been issued by the Accountant General's Office and Financial Procedures had been issued by the Central Ministries. In this research five public enterprises will be an area of further discussion.


Research Gap
Cash plays a crucial role in a company’s operation. Motives for holding cash is not only the transactions motive, the precautionary motive, and the speculative motive but also it is used to pay wages and salaries, trade debts, taxes and dividends. However it enables the company to prompt pay its creditors and suppliers so as to foster good relations but also lets the company take advantage of favorable business opportunities. Most importantly, it keeps the company liquid and prevents it from insolvency or bankruptcy.
There have been a number of researches and studies conducted on cash management practices on various fields. Mauchi, N.N. (2011), Tsaminyi, M. & Skliarova, D. (2005), Menyah, K. (2005), Capstaff, J. (2005), Wellington, T.A. (2001), Tenent, J. (1996), Lawrence, J. Gitman and Thomas M. Cook (1993), Dotsey, M. (1984), Lawrence J. Gitman, E. A. (1979), H. G. Daellenbach. (1974), William J. Baumol. (1952) etc. have conducted researches and studies on cash management practices on respective fields.

However there are no concrete reasons suggested to manage in public enterprises as well as private sector. More specifically, insufficient of the studies has been found conducted on the cash management practices in Nepalese enterprises in this research period. There are some loopholes in terms of further research. This is the sincere attempt to fill the loopholes to link the cash management practices research in Nepalese enterprises with the international research.


Chapter 3 : Research Methodology

Research methodology refers to the various sequential steps to be adopted by researcher in studying a problem with the certain subject/object in view. The major contents of research methodology followed in course of this study are as follows:

Research Design
A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose, with economy in procedure (Kothary,1988). Descriptive and comparative research design will be adopted in this study.

Nature and Sources of Data
Both the primary and secondary data will be relevant to this study. However, most of the data in this study will be gathered specially from the secondary sources. But primary data is also used when secondary data are inadequate or as per requirement of the study. Primary data will be collected through the discussion with concerned experts and subject, observation and structure questionnaires as well as unstructured interview. The secondary data including information will be collected from following source: Balance sheet, financial statement, operational reporting of particular organization. Similarly bulletins, articles, journals, central library, CBS, CEDA library, Economic survey and plans different websites etc will also be used.

Population and Sample
The word population is used in statistics denotes the aggregate from which the sample is to be taken. Under the population survey method, data are collected for each and every unit of the population or universe, which is the complete set of items, which are of interest in any particular situation. There are various private organizations and 36 public enterprises operating in Nepal. There are 176 listed companies in the operation, up to October 1, 2010 according to NEPSE.  Out of them, only seven from public enterprises and 18 from listed companies are under manufacturing sector in Nepal. These are the population of the study. Five public and five private organizations will be selected as sample using judgmental basis.

Research Variables
Sales, current assets, leverage, cash flow, debt, financial distress, profit and loss, feedback and supervision as control variables will be analyzed in proposed research.

Tools Used in Research
Data will be managed and analyzed in proper table, with formats, interpretations and explanations made. To analyze the collected data, financial tool i.e., ratio analysis, financial distress, statistical tools like mean, standard deviation, coefficient of variation and coefficient of correlation, regression, T-test , F test and Chi-square test will be used. Some diagrams will also be used for effective analysis.

Organization of the Study
The whole study is organized into five chapters in the following order.

Chapter I: Introduction
This chapter includes Overview, statement of the problem, objectives of the study, need of the study, the limitation of the study and scheme of the study.

Chapter II: Review of Literature
The second chapter reviews the pertinent literature related to this study: It includes the review of published books, Journals, Articles, thesis and dissertation. Besides this, the laws, act polices rules and regulation relating to cash management would also be reviewed under the study.

Chapter III: Research Methodology
This chapter consists of introduction, research design sources and nature of data, population and sample, method of data collection and analysis of data.

Chapter IV: Presentation and Analysis of Data
The fourth chapter deals with systematic presentation and analysis of data where various analytical tools and techniques are used to analyze and interpret the data. This chapter also deals with the descriptive procedure where analytical tools cannot be used. This chapter is a key chapter for the present study and findings from the analysis are mentioned.

Chapter V: Summary Conclusion and Recommendation
The final fifth chapter is devoted to summarize the whole study. Recommendations based on findings are made for future improvement in recommendation, statement suggestions and problem solving suggestions are included. And based on findings, summary and conclusion are drawn.


Reliability
Generally speaking, reliability indicates the accuracy in terms of measures, tools and procedure. If we get the same result frequently, it is considered reliable. Fundamentally reliability of the questionnaire will be looked into go this formalize data.
Kirk and Miller identify three types of reliability referred to in quantitative research which relates to:
·         The degree to which a measurement, given repeatedly, remains the same.
·         The stability of a measurement over time; and
·         The similarity of measurements within a given time period. (Kirk & Miller, 1986).


Validity
Validity represents any study that accurately depicts the particular conception or idea that the researcher is trying to measure. Validity is one of the strengths of qualitative research and it is based on determining whether the findings are accurate from the standpoint of the researcher, the participant, or the readers of and account (Creswell, 2009). There are four types of validity. They are given below (Creswell, 2009):

·         Statistical conclusion validity: It refers to the appropriate use of statistics (e.g., violating statistical assumptions, restricted range on a variable, low power) to infer whether the presumed independent and dependent variables covary (discoverable) in the experiment.
·         Construct validity: It means the validity of inferences about the constructs (or variables) in the study.
·         Internal validity:  It relates to the validity of inferences drawn about the cause and effect relationship between the independent and dependent variables.
·         External validity: It refers to the validity of the cause-and-effect relationship being generalizable to other persons, settings, treatment variables, and measures.
Above validity will be checked in the research to make it more valid and realistic. Proper attention will be given to the reliability and for credibility, dependability of the study. The precise care and attention will be given to select the tools, techniques, model respondents for instance.


Ethical Principles
Ethic is the set of principles of right and wrong that are accepted by an individual or a social group.  It is a standard of rules and regulation. Ethics, as we understand a method, process and perspective for evaluating complex problems and issues. It is a prominent part of research.

The following is a general summary of some ethical principles that various codes address (Shamoo & Resnik, 2009):
·         Honesty: Honest reporting of data, results, methods and procedures, and publication status.
·         Objectivity: Unbiased and imperial explanation of research design, data interpretation, peer review, and so on.
·         Integrity: Act with sincerity and strive for consistency of thought and action.
·         Carefulness: Keep good records of research activities and avoid careless errors and negligence.
·         Legality: Know and obey relevant laws and institutional and governmental policies.
·         Non-Discrimination: Avoid discrimination against anybody on the basis of sex, race, ethnicity, language, or other factors.
·         Confidentiality: Protect confidential communications, such as personnel records, correspondence, trade secrets and patient records.
·         Respect for intellectual property: Honour patents, copyrights, and other forms of intellectual property. Do not use data and other documents without permission. Give credit where credit is due.

As a researcher, I will pay deep homage and respect to all the philosophical thoughts and principles while carrying out all the research activity. Besides this, I am devoted to give special attention to all ethical disciplines.


References:
Brigham, E. F. & Ehrhardt, M. C. (2007). Financial management: Theory and practice. New York: Thomson, South Western.
Brigham, E. F. & Houston, J. F. (2004).Fundamentals of financial management: United States: Thomson, South Weston.
Capstaff, J. (2005). International cash management & hedging: A Comparison of UK and French Companies. Managerial Finance, pp.18-34.
Copeland, T. E. & Weston, J. F. (1992).Financial theory and corporate policy: California: Addition- Wesley Publishing Company. USA.
Creswell, J. W. (2009). Research design: Qualitative, quantitative and mixed methods approaches. New Delhi: SAGE Publications.
Dotsey, M. (1984). An investigation of cash management practices and their effects on the demand for money. Economic Review, pp.3-12.
H. G. Daellenbach. (1975). "How widely are cash management optimization models used?" Interfnces, pp. 69-73.
H. G. Daellenbach. (1974). "Are cash management optimization models worthwhile?" Journal of Financial and Quantitative Analysis, pp. 607-26.
John Maynard Keynes. (1936).The general theory of employment, interest, and money, New York: Harcourt. Braceand Co.
Kirk, J., & Miller, M. (1986). Reliability and validity in qualitative research. Bevery Hills: Sage Publications.
Lawrence J. Gitman and Thomas M. Cook. (1993). "Cash budgeting: A simulation approach," Journal of the Midwest Finance Association, pp. 87-100.
Lawrence J. Gitman, D. Keith Forrester, and John R. Forrester, Jr. (1976). "Maximizing cash disbursement float, "Financial Management, pp. 15-24.
Lawrence J. Gitman, E. A. (1979). An assessment of corporate cash management practices. Financial Management Association, pp. 32-41.
Mauchi, N. N. (2011). The effectiveness of cash management policies: A case study of hunyani flexible products. Educational Research, pp. 1299-1305.
Menyah, K. (2005). International cash management in the 21st century: Theory & practice. Managerial Finance, pp.3-17.
Pant, P. R. & Wolf, H. K. (2009). Social science research and thesis writing: Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd.

Pradhan, R. S. (2000). Basics of financial management: Kathmandu: Educational Enterprise: Nepal.

Pradhan, R. S. (2004). Financial management: Kathmandu: Buddha Academic Enterprises Pvt. Ltd: Nepal.

Shamoo, A., & Resnik, D. (2009). Responsible conduct of research. New York: Oxford University Press, Inc.
Tsamenyi, M., & Skliarova, D. (2005). International cash management practices in a Russian multinational. Managerial finance, pp.48-64.
Van Horne, J. C. (1969). A risk– return analysis of a firm’s working capital position. The Engineering Economist, Vol. 14, No. 2 (winter), pp.71 -88.

Van Horne, J. C. (2005). Financial management and policy: New Delhi: Prentice Hall of India Pvt. Ltd: India.

W. H. Hausman and A. Sanchez-Bell, (1975)."The stochastic cash balance problem with average compensating balance requirements," Management Science, pp. 849-57.
Wellington, T. A. (2001). International government cash management practices. Storkey & Co, pp.2-22.

Weston, J. F.& Copland, T. E. (1992).Managerial finance: New York: The Dryden Press.


William J. Baumol. (1952). "The transactions demand for cash: An inventory theoretic approach," Quarterly Journal of Economics, pp. 545-56.