Cash Management of the Selected Jordanian Large Scale Public Limited Industrial Companies

Abd Assalam Abu Tabanja


This study examines the availability of cash and bank balances as per operational requirements and liquidity and solvency, to evaluate the adequacy of cash management, and to analyse the efficiency of cash management in the selected Jordanian Industrial Companies (JIC). For the purpose of an indepth analysis, sets of twelve manufacturing industrial companies have been selected following Judgement sampling, which have been divided further into four sectors. In order to maintain a homogeneous selection and for an accurate result, three major industrial companies have been selected under each sector according to the availability of data. The present study is confined to the period of 15 years i.e., from 1987 to 2001. Employing time series analysis and cross section analysis for the financial ratios considered, the study concludes that the JIC had a volatile financial ratio as to the standard financial ratio over the period under consideration. It is also found that some of the industrial companies had either more or less cash balances than the operational requirements. The percentage of cash to current assets is found 13.15 per cent for all the companies. The overall results, however, shows that the current ratios and the liquid ratios were 0.97:1 and 0.37:1, respectively which were well below the standard norm (i.e., current ratio 2:1 and liquid ratio 1:1). This result has a direct impact to both the liquidity and profitability position of the selected industrial companies.


Cash Management, Liquidity, Solvency, Financial Ratios

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