Effects of Cash Management Practice On Financial Performance of Las Pinas Florita Trading 2

CITY COLLEGE OF CALAMBA
DEPARTMENT OF BUSINESS AND ACCOUNTANCY

Bachelor of Science in Accountancy
EFFECTS OF CASH MANAGEMENT PRACTICES

ON FINANCIAL PERFORMANCE OF LAS PINAS-FLORITA
TRADING
A Thesis presented to the

Faculty of Department of Business and Accountancy of the City College of
the
City College of Calamba
Calamba, City
BACHELOR OF SCIENCE IN ACCOUNTANCY
Ariz, John Karlo N.

Caligan, Hanna Mae C.
Casipit, Beatriz M.
Daus, Jeremae S.
April 9, 2022
APPROVAL SHEET
This thesis hereto entitled:


ii
Effects of Cash Management Practices on Financial Performance

of Las Pinas-Florita Trading
prepared and submitted by John Karlo N. Ariz, Hanna Mae C. Caligan, Beatriz M.
Casipit, and Jeremae S. Daus, in partial fulfillment of the requirements for the degree,
Bachelor of Science in Accountancy has been examined and recommended for
acceptance and approval.
Adviser
Approved by the Committee on Oral Examination with a grade of _____________
ELLEN C. ALMORO, CPA, MBA

Chairman
RONNELSON PASCUAL, CPA REGINA G. ALMONTE, PhD

Member Member
Accepted in partial fulfillment of the requirements for the degree, Bachelor of

Science in Accountancy
RICHIE V. MENDOZA, MAEd

Vice President for Research and Innovation
Certificate of Quantitative Data Treatment
This certifies that the thesis entitled,


ii
i
“Effects of Cash Management Practices on Financial Performance of Las Pinas-
Florita Trading” conducted John Karlo N. Ariz, Hanna Mae C. Caligan, Beatriz M.
Casipit, and Jeremae S. Daus, whose research design was descriptive method, had been
subjected to Quantitative Data Treatment utilizing Statistical Package for Social Sciences
(SPSS) at City
College of Calamba by the undersigned.
RICHIE V. MENDOZA, MAEd

Institutional Statistician, City College of Calamba
Organizational Affiliation/Membership
Certificate of Grammar Editing
This certifies that the thesis entitled,


i
v
“Effects of Cash Management Practices on Financial Performance of Las
PinasFlorita Trading” conducted John Karlo N. Ariz, Hannah Mae C. Caligan, Beatriz
M.
Casipit, and Jeremae S. Daus, whose research design was descriptive method, had
been
subjected to Grammar Editing at City College of Calamba by the undersigned.
DANICA R. MILLARIO, MAEd

Institutional Grammarian,
City College of Calamba
ACKNOWLEDGEMENT
The researchers would like to express their sincere appreciation and deepest
gratitude to the following people who offered their untiring support and help in making
this study

v
complete and possible:
First and foremost, the researchers would like to thank God for His unending love
and guidance, which has enabled the researchers to carry out this study.
To the families who encouraged and supported the researchers throughout the
semester for willingly providing moral and financial support.
The researchers would like to express their heartfelt gratitude and honor to their
research adviser, Prof. Joyce Ann Lavapiez, for her patience, guidance, support, and
thoughtfulness in sharing her knowledge. Also, thanks to Prof. Richie V. Mendoza and
Prof. Danica Millario for serving as statistician and language editor for the researchers
in this study, respectively, and for devoting their time solely to assisting the researchers
in carrying out this research. To the panelists: Prof. Ellen Almoro, Prof. Ronnelson
Pascual, and Prof. Regina Almonte for their inspiration and timely and
insightful feedback on this study.
Finally, the researchers are extending their deepest and wholeheartedly gratitude
to Las Pinas-Florita Trading for actively participating in the study and lending their
time
and full attention. They could not have done this without you.
May God bless you all to God be the glory.

TABLE OF CONTENTS
Page
PRELIMINARIES

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i
Approval Sheet ii
Certificate Of Quantitative Data Treatment iii
Certificate Of Grammar Editing iv
Acknowledgment v
Table of Contents vi
Abstract viii
CHAPTER I: THE PROBLEM AND ITS SETTING 1
Background of the Study 1
Statement of the Problem 3
Significance of the Study 4
Scope and Limitations of the Study 4
Definition of Terms 5
CHAPTER II: REVIEW OF RELATED LITERATURE 7
CHAPTER III: RESEARCH FRAMEWORK 18
Theoretical Framework 18
Conceptual Framework 21
CHAPTER IV: RESEARCH METHODOLOGY 23
Research Design 23
Research Locale 23
Population of the Study 24

Research Instrument 24
Data Gathering Procedure 25
Treatment of Data 25
CHAPTER V: RESULTS AND DISCUSSION 27
CHAPTER VI: SUMMARY OF FINDINGS, CONCLUSION, AND 38

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RECOMMENDATIONS
Summary of Findings 38
Conclusion 39
Recommendations 40
REFERENCES 42
APPENDICES 48
Appendix A: Research Questionnaire 48
Appendix B: Consent Letter 52
Appendix C: Vicinity Map of Las Pinas-Florita Trading 53
Appendix D: Financial Statements of Las Pinas-Florita Trading 54
Appendix E: Research Forms 61
Appendix F: Turnitin Result 69
Appendix G: Researchers’ Curriculum Vitae 70
ABSTRACT
The Micro, Small, and Medium Enterprises (MSMEs) are vital for economic
development and employment generation. The implementation of sound cash
management practices is essential to ensure their profitability and sustainability. This
study sought to analyze the effects of cash management practices on the financial
performance of Las-Pinas Florita Trading. The respondents are the owner and the
bookkeeper. A descriptive survey was used. Researchers conducted an interview and
administered a questionnaire. The data gathered was validated through inspection, and
verification of documents. Tables were used to present the data, which were treated with
frequencies, percentages, and mean scores. The two consecutive financial statements of
Las-Pinas Florita Trading, dated 2019 and 2020, are utilized to extract the financial ratios

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needed for the study. The Cash Ratio, Quick Ratio, and Net Profit Margin are used as
measures of liquidity and profitability. A study indicated that good cash management
practices improve financial performance. It clarifies that cash budgeting, cash collection,
and cash disbursement have favorable financial performance consequences.
Keywords: MSMEs; Cash Management Practices; Financial Performance; Liquidity;
Profitability;
DEPARTMENT OF BUSINESS AND ACCOUNTANCY 1
Chapter 1
THE PROBLEM AND ITS SETTING
Background of the Study
Cash management is basically the management of cash collection, concentration
and disbursement along with the maintenance of sufficient cash liquidity, positive cash
balances and short-term investments (Prasad, 2017). It can be summarized as all activities
and actions relating to maintaining proper cash threshold in order to meet the day-to-day
operational needs of the entity (Abioro, 2013). Cash management is an important part of
an entity’s business cycle because it helps improve their performance on profitability. In
the actual process, cash management is generally achieved by means of the three factors:
cash
budgeting, cash collection and cash disbursement.
Furthermore, the liquidity and profitability being measured in the cash
management activity relates to the definition of financial performance, as it is defined as
the process of determining the entity’s operating characteristics (Bhunia and Brahma.,
2011). Therefore, the effect of the entity’s cash management can be reflected on their
financial performance. In this study however, the financial performance comprising both
liquidity and profitability will be narrowed down to the aspect of liquidity alone as it
deals with the management of the
most liquid asset.

Las Pinas-Florita Trading is a family-owned business based in San Pedro, Laguna
and was founded in 2016. It is a trucking company that provides vehicle rental. Most of
their commitments were delivering goods and providing shuttle services to their partnered
companies within the province. Dolores L. Florita, the person behind the company, had
started this with an initial asset of two trucks and limited clients. But by the passage of
time, the number of trucks increased to five (including two Subcon). Las Pinas-Florita
Trading is a Micro Small Medium Enterprise (MSME) that started with a capital of two
million pesos and
remains in business up until today.
The need for the study arises when, after the initial interview, it has been found
that they are experiencing problems regarding their cash related transactions. The owner
disclosed that there are certain issues relating to the payment collection. According to
them, some clients do not process and amend the required papers resulting in pending
documents. This event was further led to the following situations: a) late salaries
payment, and b) bad debts, or unable to recover the money owed. The entity also
experienced internal problems when it comes to the proper action to be done by both the
entity and the employees when it comes to the payment of salaries. Since Las Pinas
Florita Trading is not a big company, the researchers assumed that these problems can be
linked with their implemented cash management practices, as they sometimes incur
additional investment in order to have
sufficient amounts of cash.

Having a proper cash management practice is important to any type of business as
it defines the firm’s liquidity. As a result, the purpose of this research is to define, from
the perspective of a micro, small, and medium-sized firm, the cash-related activities and
how they should be handled as soon to be specialists in the field. It is the researchers'
responsibility to seek answers regarding the situation of Las Pinas-Florita Trading's cash
management practices and how it affects their financial performance with an emphasis on
liquidity, determine the cash issues that they are dealing with, and propose a solution
regarding their current management.
Statement of the Problem
Business entities are facing different financial problems due to the lack of a strong
financial handling system. Some entities have their cash management strategies which are
aimed for the improvement of the business' financial performance and some are not
capable of doing it properly. According to (Brinchk, Soeren and Gemuenden, 2011) the
cash needs to be efficiently managed and allocated to meet the everyday routine of a
business achieving
their objectives.
This study aimed to determine the effects of the cash management practices on the
financial performance of Las Pinas-Florita trading.
Specifically, it sought to answer the following questions:
1. What are the cash management practices of Las Pinas-Florita Trading in terms of:
1.1 Cash Budgeting
1.2 Cash Collection

1.3 Cash Disbursement
2. What is the financial performance of Las Pinas-Florita Trading in terms of liquidity
ratio?
2.1 Quick Ratio
2.2 Cash Ratio
2.3 Net Profit Margin

Significance of the Study
Along with the significance of small businesses to the national economy, the study
of cash management practices is necessary to the ability of owners to create sustainable
businesses that contribute to the well-being of local economies.
This study could be highly significant and beneficial specifically to the following:
Small Business Owners. The findings of this study can help small business
owners increase firm performance by employing cash management to make better
decisions to ensure optimum benefit. Understanding cash management practices, such as
the proper timing of cash inflows, outflows, and investments, can help business owners
forecast cash
needs.
Employees. This study of cash management practices enables the employees to
work with their best performance knowing that effective cash management practices were
implemented in their work and will receive wages equal to what they had worked for. As
the business will continue to get through an adequate cash generation aligned with proper
cash
management practices, employees will also continue to benefit from it.

Future Researchers. This serves as a reference for further study into how cash
management practices affect the financial performance of Micro Small Medium
Enterprise
(MSMEs).
Scope and Limitations of the Study
This study focused on the trucking company, Las Pinas-Florita Trading, located at
San Pedro, Laguna. The research also centered on the company's financial accounts for
the years 2019 and 2020.
The data provided in this study is limited to the response of an owner and a
bookkeeper. Thus, the data collected from interviews with this small business owner and
an examination of business documents might not support results and conclusions
concerning
larger small businesses and other industries.
Definition of Terms
The following are conceptually and operationally defined terms found in the
context of this research:
Asset. Bought or created to increase a firm's value or benefit the firm's operations. It is a
resource that the entity controls as a result of past events and from which the entity
expects future economic benefits.
Bad Debts. Receivable that is now irrecoverable from that person who was supposed to
pay the same. This is a type of expense incurred by the business when a customer's
repayment is
no longer considered collectible.
Cash Budget. Represents a business owner’s expectation of cash inflows and outflows
from all sources and uses for a defined period. This budget is used to assess whether the
entity has sufficient cash to continue operating over the given time frame.
Cash Flow. It refers to the movements of money into and out of a business. Businesses
take in money from sales as revenues and spend money on expenses.
Cash Management. The efficient collection, disbursement, and investment of cash in an
organization while maintaining the company’s liquidity. It maximizes liquidity and
controls cash flows, and maximizes the value of funds while minimizing the cost of
funds.
Liquidity. Amount of money that is readily available for investment and spending. This
refers to an investor's ability to sell an investment as a means of payment or easily
convert. it to cash without risk of loss of nominal value.
Micro, small and medium enterprises (MSMEs). Enterprises that have 1-99
employees. They serve as valuable partners to large enterprises as suppliers and providers
of support services.
Profit. The remaining revenue generated by a business after all expenses linked to the
conduct of business activities have been paid. This is an excess of total revenue over total
cost during a specific period of time.
Trading Company. A company carries on activities that include trading activities. They
are engaged in or transact the business of transporting freight, merchandise, or other
property
for hire.
Working Capital. The capital of a business is used in its day-to-day trading operations. It
consists broadly of that portion of the assets of a business that are used in or related to its
current operations.
Chapter 2
REVIEW OF RELATED LITERATURE
Retail Business and its Cost
According to Hameli (2018), retail business is the exchange of goods and services in
return for a small consideration with the party of consumers, manufacturers and
agriculturists defines retail business. It serves as a distribution channel in the market.
Moreover, the specific costs or additional costs directly attributed to retail business
depends upon several factors or the nature of the retail business itself (Dhotre, 2010).
Each type of retail business offers different kinds of services which would be reflected on
the products they sell and therefore provides the picture that despite doing the same line
of business, the prices would still vary. Retail businesses are smaller compared to those
big entities we set our minds on, but it still has the same elements and features which also
makes it liable to practice proper management especially those that relates to cash.
Financial Issues and Financial Management relating to Micro Small Medium
Enterprises
Indeed, proper cash management is said to have an effect on the profitability of
micro small and medium enterprises, but the question as to “how” still remains unsolved.
But, according to Mendoza (2015), in his study in assessing the financial performance of
micro small and medium enterprises in the Philippines, his overall assessment shows that
there is a significant difference between the receivable turnover, asset turnover and debt
ratios. Because their study included the testing of the significant difference in financial
performance of grouped micro small medium enterprises into
three categories,
organizational form, business type and asset size. His study showed similarities to this
study upon looking into the cash management practices or the financial performance of
MSMEs, it only differs from the fact that Mendoza’s study focused on the significant
difference of the financial performance among the three variables. However, this study
focuses to get a full look on the cash management practices of the selected micro small
medium enterprise and how it affects their financial performance. Mendoza concluded
that micro small medium enterprises should improve their strategies upon dealing with
financial performance and thus, extend it with the external environment in order for the
micro, small and medium enterprise
to portray their role with regards to the economy’s growth.
Micro Small Medium Enterprises has a strategic importance to the economy and
the country (Singh and Wasdani, 2016). Despite being smaller it could also create a
significant effect as its number continued to be getting larger. The Philippine Statistics
Authority (PSA)
has recorded an approximate number of 952,969 MSMEs in the country. However, in the
study conducted by Singh and Wasani (2016), they concluded that the limitation of
MSMEs lies in their finances. Therefore, they aimed to determine whether the
entrepreneurs’ financial awareness was the causes of the limitation in their finances.
Similar to this study, the researchers were also under the same line of vision that the
selected entity may also have
certain limitations when it comes to financial knowledge.
It is recommended for MSMEs to train or have proper knowledge with regards to
debt management literacy, banking services and bookkeeping literacy in order to have an
effective corporate social responsibility that would enable them to grow (Irikefe and
Isaac, 2021). In this study however, the MSME would be merely assessed regarding their
cash management practices in the firm and whether or not it would have an effect to their
financial performance.
Micro small medium enterprises play an important role with regards to the
economy’s growth, but it does not share the same financial issues with big companies.
The study entitled Financial Management of Micro, Small and Medium Enterprises in
Cebu, Philippines (Anoos, Gimena Etcuban, Dinauanao, and Macugay, 2020),
concentrates on the financial management of micro and small medium enterprises within
the vicinity of Cebu thereby revealing that their selected enterprises practices financial
management only in moderation. Being an MSME could mean that there are some
limitations to their capacity with regards to financial management and having such
deficiency triggers threats on its sustainability as a business. Based on their study (Anoos
et. al., 2020), there are some micro, small and medium enterprises that do not practice
generally accepted standards on the financial management and control of the business.
They concluded that despite being small, each micro, small and medium enterprise shall
still adhere to the proper accounting and financial management in order to extend the life
of their business. Their study has a larger scope than this research, since their
investigation highlights the financial management of micro, small, and medium
enterprises as a whole, whereas this analysis focuses solely on cash
management and is limited to a single organization, Las Pinas Florita Trading.
The studies included in this research would be considered relevant to the research
process as these items connect with the facts to be dealt with in the span of this study.
Thus, each mentioned fact were considered relevant upon venturing through the entire
process of
the study.
Cash and its Significance
Cash is the major aspect of businesses; without it, it would be impossible for the
business to continue working. According to Chebii, Kipchumba & Wasike (2011), the
majority of the companies face issues with regards to their funding structure. Thus, these
problems affect micro, small and medium enterprises highly because they rely merely on
the amount of cash inflows. The importance of the existence of cash proves the
importance of
its management as well.
Cash is never an endless source, that’s why every business must manage it efficiently
and effectively, and the only way to do so is by practicing proper cash management
(Constante, Daniel, & Flor, 2019) A proper cash management is an effective way to
ensure that the small amount of cash available to the business will be managed well to its
full potential and thereby allowing the occurrence of its full benefit for the business
(Gilbert, 2015). But, as stated in the study by Gilbert (2015), if a small medium enterprise
happened to have poor cash management practices, it would result in problems with the
cash flows which is caused by the inability to acknowledge financial obligations and
causes the entire
business to result in failure of expansion.
In a study done by Enow and Kamala (2016), it was found out that MSMEs might
have been able to manage their cash effectively but they lose sight of holding cash for
speculative purposes thereby failing to optimize cash as a scarce resource. The
significance of cash doesn’t just merely rely on having it on hand, but being able to fully
utilize its usage
for the entity’s benefit.

All types of businesses needed cash in order to meet the needs of their businesses,
but it is more significant among micro, small and medium enterprises because they only
have a limited or smaller amount of cash inflows compared with larger businesses. Micro,
small and medium enterprises are important for developing countries socially and
economically (Tambunan, 2019). Small medium enterprises are smaller than large
companies, they are more flexible and they quickly adapt to the changes in demand and
are able to reach dull conditions quickly (Erdin and Ozkaya, 2020). Therefore, we could
conclude that MSMEs could be more flexible and has the capacity to adapt more quickly
than SMEs due to the fact of being smaller. However, the fact still remains that no matter
what the advantages may be of being a smaller enterprise, a business is a business and
should still therefore be profitable.

Cash and Profitability
As mentioned in the study done by Lal Pandey (2020), organizations that do not
practice or have ineffective cash management are not able to reach their desired profits
and once they do, the business will further fail. His study proves that there is a
relationship between the cash management and the profitability of a small medium
enterprise which will become the foundation of this study as it deals with the cash
management practices of a
small medium enterprise and determines what are the effects on its financial performance.
The rising cash level is an important event for any type of business (Fernandes &
Gonenc, 2016), because it sets the availability of cash and allows it to be readily used for
needed transactions. Also, having cash inflows could provide the confidence of
sustainability and could create the conclusion that a firm has an effective cash
management.
Profit maximization is one of the major goals for any business enterprise. Brigham
and Houston (2012) defined profitability as the ability of a firm to earn profit. Profit is the
excess amount of money created by the firm from its own resources to earn revenue after
paying its expenses. In the study of Cash Budgeting practices and Profitability of Small
and Medium Sized Enterprises in Kenya defined that a firm needs to measure profitability
to assess its performance since earning money and just paying expenses is not necessarily
an
indication of a firm’s profitability.

A study about the Effect of cash management on firm profitability by
AkinyomiJohn (2014), takes a more specific look upon the situation. He had conducted a
study among small medium enterprises in their country and assessed whether the location
affects the relationship between cash management and profitability. He had concluded
that a business’ success depends on how well the management of cash is planned. Thus, it
is realized that cash management is more significant than management of other current
assets because cash is the most important asset of a business. This is similar to the main
reasoning of this study because cash management is considered a flow of life of any
micro, small and medium
enterprise.
Cash and the Entity’s Performance
Cash is also a means to measure an entity’s performance. The total cash inflows of
a firm can be used to measure the effectiveness of their performance as an entity.
Therefore, cash management can affect the overall performance of a business as it is the
ending result of the overall process (Oluoch, 2016). This study shows the other important
factor that could be affected by the cash management practices of a business. This fact
would be relevant in assessing the cash management practices of the selected firm and
thereby shows
the relevance of having cash management practices of any types of businesses.
Concluded in the study of Miranda and Miranda (2021), most of the times one of
the reasons for financial losses to occur in any type of business was having the inability to
manage their financial resources. These financial resources include cash. Therefore, if an
entity lacks the ability of managing cash, there could also be a probability of financial
loss.
Cash Budgeting
Cash budgeting allows the business to grasp an understanding whether they have a
sufficient amount of cash in order to meet their operating activities (Kibor & maina,
2019). This process is preceded by the planning of the cash flow of the entity and should
therefore ensure that the expenditures in the budget would match with it (Eton, et. al.,
2018). Cash Budgeting is included in the process of the management control as it is
established in order to practice an efficient use for their resources and be able to provide
for critical functions (Eton, et. al., 2018). It serves as the framework that would serve as
the guidelines for the implementation of strategic decisions that would ensure that
resources are used efficiently in order to arrive at the desired objective (Eton et. al, 2018).
Cash Disbursements
Cash Disbursement is commonly understood as the outflow of cash from a firm. It
is the opposite of the main goal of the company which is to maintain a certain amount of
cash for different cash motives. In order to maximize the amount of cash, it is the goal of
a firm to maximize the “disbursement float” and slow down the cash disbursement
(Pandey, 2010). This “disbursement float” is a strategy of financial managers on delaying
payments as long as they could in order to ensure efficient cash management, by means of
this, the firm may be able to maximize the use of interest free source of funds granted by
the creditors
(Gilbert, 2015).
Cash Receipts or Cash Collection
Cash receipts is the inflow of cash into the company. Having cash receipts secures
the amount of cash of a firm as it is readily available and will help suffice the different
motives for holding cash. But according to Gilbert (2015), the financial manager has the
duty to balance the firm’s profitability and liquidity. Therefore, a firm must be able to
practice good cash management in order to deal with the decisions relating to cash needs.
Because, just by practicing a proper cash management allows the firm to manage fully the
small amount of cash and be able to utilize it up to its maximum benefits (Gilbert, 2015)
Cash Management
Cash management is the management of a firm’s liquidity in order for them to
suffice with their day-to-day commitment (Babil, 2012). An entity deals with the
everyday management of cash and is therefore subjected to practicing its proper
management every day. Babil’s study shows that an entity that practices proper
management may be able to receive a sufficient amount of cash that would sustain the
needs of the entity but there would still be areas that would need further improvement.
Despite that, having minimal issues or problems to be dealt with increases the efficiency
of small medium enterprises thus
creating the conclusion of having effective cash management.
According to Charitou and Lois (2010), the good utilization of the firm’s
resources, through management may result in an effective and efficient way to deal with a
day-to-day business operation. In the study, the Impact of Cash Management Practices on
Performance of SMEs determined that cash management is necessary for every business
since it
contributes to the increasing profitability, future planning and longevity of the business.
To
avoid any cash problem, many companies adapted to the idea of having effective cash
management so that businesses could build sustainable cash flow and to have efficient
day to
day operations and sustained growth of the business.
The study done by Enow and Kamala (2016), about cash management practices of
small, medium and micro enterprises, led to the findings that there are a few existing
small medium enterprises that hold cash for speculative purposes or invest their cash
which results in failure in maximizing scarce resources. As small medium enterprises,
cash is a scarce source and should therefore be treated with proper planning of its
management in order to prevent its scarcity that could lead to the failing of an entity.
Unlike this study, they focus merely on cash management practices whereas this study
will present what cash management does to the financial performance of a selected micro,
small and medium enterprise.
Cash Management and Financial Performance
A similar study about the cash management practices and financial performance
of small medium enterprise focuses on the same relevant facts but dealt with it in a
different methodology. Instead of assessing a selected entity, they conducted a
quantitative study and surveyed 1000 owners or managers of small medium enterprises.
Their survey has led them to the conclusion that, indeed, cash management has an
influence on the financial performance of a small medium enterprise therefore there is a
need for small medium
enterprise owners to exercise efficient cash management practices to improve their
financial performance (Kasim, Mutala and Antwi, 2015). The underlying fact of their
study regarding the importance of cash management was already considered and the cash
management
practices being studied shall be viewed as lacking or needing improvement in relation to

the
facts disclosed with the researchers.
Cash Management involves the process of the cash collection, monitoring of the
cash and also the investment activities. Hansen (2005), shows that it is one of the key
elements for ensuring a company's financial stability and solvency. The study of Cash
Management on the Financial Performance of the Companies listed at the Nairobi
Securities Exchange stated that the management of cash should be maintained by the
business so that
delays caused by poor management will be avoided.
As cash management affects financial performance, it could also mean that cash
management can also affect the growth of the enterprise itself. The growth of small and
medium scale enterprises was assessed depending upon the impact of the financial
management being practiced in a study by Bismark et. al. (2018). It studies the specific
bookkeeping practices such as the process of managing cash flow. Their study mirrored
the fact that the company’s growth depended upon its management. Therefore,
concluding that small medium enterprises should have proper financial information
because it will help them sustain the life of their business. This would be relevant to this
study as it determines the cash management practices of a small medium enterprise
because there is an aim to recommend what should the recommendations be for the
further betterment of the selected business in order for the life of the entity to lengthen
and also allows the identification of what are the flaws in the current management
practices of the entity.
Synthesis of the Study
This study shows the strength and susceptibility of the most liquid asset, cash.
Cash is easily dispersed thereby arising to the need for it to be managed well especially
for micro, small and medium entities who only have a limited supply of cash. The limited
amount of
cash risks an entity being susceptible to financial issues while being able to fully utilize
its value will realize its strength. Cash management, which is management of cash related
activities, is practiced in order to fully utilize the value of cash and create strategies of
holding it to the entity’s advantage.
This study focused more on the three major aspects of cash management which
are cash budget, cash disbursement and cash receipts or cash collections. But such
management shall only be limited to the operating activities of the Las Pinas Florita
Trading. Several studies have proven that there is a significant relationship between cash
management practices and financial performance, wherein financial performance is
defined as the
measurement of the firm’s profitability and liquidity.

All businesses aim to be profitable and the studies above have shown that in order
to do so, the first thing to do is to manage cash. Therefore, this study attempted to
evaluate and determine what are the cash management practices which would have a
significant effect to the financial performance, determine what are the issues to be dealt
with and be able to provide conclusive recommendations that would help micro, small
medium entities recognize the importance of cash and its management to the liquidity
aspect of the firm’s
financial performance.
Chapter 3
THEORETICAL FRAMEWORK
Financial Performance
Financial performance is the financial condition of the company within a certain
period, it is the ability to manage and control their resources (Fatihudin, Jusni and
Mochklas, 2018). The financial performance shows the outcome of business sectors and
the results of its financial health (Naz, Ijaz and Naqvi, 2016). It generally shows how
good is the entity’s utilization of their resources which contributes to the maximization of
wealth and profitability. However, in order to measure an entity’s financial performance,
some of its determinants are profitability and liquidity (Ndirangu, 2014). Therefore, this
study would
determine the financial performance of Las Pinas Florita Trading by means of its
profitability and liquidity.

Cash Management
Cash Management, based on the word itself, is the management of cash. The
broad definition was narrowed by Pandey (2010) by concluding that the cash
management has the following aspects; Cash planning, managing cash flows, Optimum
Cash Levels and Investing Surplus Cash. In this study, Pandey’s aspects would be
translated and reduced to three factors namely; Cash Budgeting, Cash Collections and
Cash Disbursements.
Cash Budgeting
According to Foster (2017), Budget is a tool that can be used and seen in any type
of business. It has a significant role to perform in any organization (Eton et. al., 2018)
because it helps in determining the liquidity position of the firm (Abioro, 2013). Cash
Budgeting is considered as an annual planning tool that will help in achieving
profitability, liquidity and stability (Silva & Jayamaha, 2012). Under the assumption that
Cash Budgeting has an effect over the company’s profitability, it would be included as
one of the elements of Cash management.
Cash Disbursement
Cash disbursement is defined as a process that relates to the purchase order system
of a company (Ramadiyansari & Saasongko, 2020). It is also a function of accounts
payable (Somalia & Amin, 2017). But cash disbursement is basically defined as the
release of cash from one entity to another (Keng’ara, 2014). The disbursement of cash
indicates a
movement on its amount and could therefore create a significant effect to the firm’s
liquidity
which would be one of the factors to consider in measuring the entity’s financial
performance.
Cash Receipts or Cash Collection
Cash receipts is a function of accounts receivable which recovers a certain amount
of cash from an individual or an entity (Somalia &Amin, 2017). In a study by Abioro,
(2013), it is said that cash collection, in contrast with cash disbursement, should be
collected faster in
order to be included in the cash balance and disburse it slower. Similar with cash
disbursement, the receipts or collection of cash would also affect the firm’s liquidity and
by extension its financial performance as well.
Cash Management and Financial Performance
Cash is the most basic necessity for a business to continue running (Pandey,
2010). But the availability of cash within an entity does not indicate a favorable
performance if it doesn’t include proper management (Abioro, 2013). Cash is the most
liquid asset in an entity therefore the need to manage it well arises especially for micro,
small and medium sized enterprises. It is also the ultimate output of profit to be expected
to be realized when an entity undergoes its normal operation (Pandey, 2010). Therefore,
we can conclude that, cash is the most liquid asset that can be used to measure an entity’s
liquidity and profitability.
Thus, an entity’s cash management would have an effect to its financial performance.
CONCEPTUAL FRAMEWORK
Figure 1 of the study shows the Research Framework of the study. The variables
were grouped into two categories. First are the independent variables such as cash
budgeting, cash collection and cash disbursement while the dependent variable was the
Financial Performance of Las Pińas-Florita Trading.
The conceptual framework shows the relationship between dependent and

independent variables.
Cash Budgeting
CashInflowandOutflow
Financial
Performance of
Las Pińas-
Cash Collection Florita Trading
Cashrelate collection
o receivable LiquidityRatio
d s f s
and
Profitability
Ratio
Cash Disbursement
Cashrelate payments
d
Independent Variables Dependent Variables
Figure 1. Relationship of Cash Management Practices and Financial

Performance
Cash budgeting allows the business to determine whether the company has a
sufficient amount of cash in order to meet the operating activities. This process is
essential in planning of the cash inflow and outflow of the entity so that the company will
know if it will suffice the related expenditures. While cash collection is the inflow of cash
related collections of receivables into the company and having this will secure the amount
of cash that will help suffice the different motives for holding it. And lastly, cash
disbursement, is the outflow of cash related payments but in this study the disbursement
of cash will mainly focus on the entity’s normal operating cycle. These variables helped
determine how the cash management practices affect the financial performance of Las
Pińas-Florita Trading.
Chapter 4
RESEARCH METHODOLOGY
This chapter presented the research design of the study which included the
research locale, population and sampling of the study, research instruments and data
collection
procedure for data analysis, interpretation and treatment.
Research Design
A descriptive study was chosen to undertake this research to understand and
assess the cash management practices of the chosen business. The research was
conducted by collecting the data from the primary sources. Interview and questionnaire
were the main instrument that were used. Both contained open-ended and closed-ended
questions about the history, process and other aspects in the business that they have
encountered and questions that provided answers for the research problem.
Research Locale
The business that was chosen by the researchers is the Las Pinas-Florita Trading
located at the City of San Pedro, Laguna, Philippines where the business was
implemented. The respondents were interviewed online via video call and chat. The
respondents of this study are the owner and employees of the company that had a total
number of 5 employees. Las Pinas-Florita Trading is a family-owned business based in
San Pedro, Laguna. Dolores L. Florita had started a trucking company with two trucks
and limited clients. With the passage of time, number of trucks increased to five
(including two Subcon). The company is a small-medium-sized offering services such as
vehicle rental for delivering goods and shuttle services to their
partnered companies within Laguna and any point in the
Philippines.
Population of the Study
There were a total of two (2) respondents in the study; the owner and the
bookkeeper of the business. The participation of the respondents is fundamental for the
data gathering in this study. Considering the small total population of this study,
determining a sample size is no longer needed for obtaining accuracy. Hence, the
sample size used was the total data that could be collected from the total population of
the study.
Research Instrument
The researchers used online interviews and questionnaires as the principal
instrument in gathering and collecting data. The researchers were very particular in
forming the questionnaire to collect reliable data and create bias free and avoid
culturally sensitive language. The formulated questions from the questionnaire are based
from the past studies and related literature where general information of the company
and three cash variables of the study including Cash Budgeting, Cash Collection and
Cash Disbursement are presented. These variables are separated each for corresponding
questions about how these company’s
cash management practices affected their financial performance.

The online interview is for the open-ended questions regarding the challenges
and experiences about the cash management practices and financial performances. The
questionnaire is for the close-ended questions including primary information of the
business such as history and background of the company.
For additional research, a retail business, the same as with the target company of
this study, refers to a markup which is a value added to the cost of the product or
service. This retail markup is common to many products and services and in the
industries. There is a retail markup calculation when there is a retail sale occurring.
Data Gathering Procedure
The primary data for this study was gathered through the administration of a
questionnaire, which was then supplemented by interviews as needed to provide greater
understanding and explanation for both the researchers and the respondents. After the
questionnaire was validated by the adviser, it was distributed to the owner of Las
PinasFlorita trading. Researchers obtained a signed letter of consent form from the
owner prior to the interview. The letter of consent form for this study contained a
description of the study's aim, risks, and benefits, as well as the option for participants
to refuse to disclose personal information. The researchers assured the respondent on the
confidentiality of all the information given.
Treatment of Data
Once the researchers had received the responses, the following statistical
treatment was used to answer the specific problems of the study. It includes frequency
and percentage distribution, as well as the mean, and ranking. The frequency percentage
formula used in the
study was:
_________Frequency________ X 100 Total

number of participants
Ranking is a question response format in establishing some type of priority among a
set of subjects, whether they are policies or attributes of the company. There are two
steps for calculating the mean: Add up all the values in the data set and divide this number
by the
number of values.
Items were chosen so that they comply with the test specification which is drawn
up through thorough examination of the subject domain (Foxcraft, 2004). Documentary
research and consultation with an expert were conducted by the researchers to test the
content validity.
Chapter 5
RESULTS AND DISCUSSION
This chapter contains the results of the data gathered from the two respondents
from the Las Pinas – Florita Trading who holds the position of the bookkeeper and the
owner. The following data are presented in the order of the statement of the problem
followed by the interpretation of the results and discussions derived therewith.
I. Cash Management Practices of Las Pinas Florita Trading
On the matter of data gathering, the Las Pinas Florita Trading received a set of
questions of the commonly practiced cash management in micro, small and medium
enterprises referenced on related literatures and past studies. Thus, this provided
indication whether the Las pinas Florita Trading manages its cash in a manner generally
accepted given
that such practices would have a significant effect on their financial performance.
The cash management practices are presented in accordance with the following
variables:
1.1. Cash Budgeting
Table 1. Frequency Percentage of the Practiced Cash Budgeting

of Las Pinas Florita Trading
Frequency Percentage
The company have monthly or quarterly
budget versus actual reports 2 100%
The company have a budget system that 2 100%
provides sustainable advantages for better
financial performance
The company forecasts expenses and capital 0 0

spending at least once per quarter
The company ’ s budget system is reliable to meet 2 100%
the financial targets
The table above shows that the Las Pinas Florita Trading have monthly or
quarterly budget versus actual reports evidenced by the 100% frequency percentage. It
also shows that it has a budget system that provides sustainable advantages for better
financial performance and the said budget system is reliable in meeting their financial
targets. Both of which also has a frequency percentage of 100%. The failure of small
businesses is caused by having poor planning wherein cash budgeting is a significant part
(Foster, 2017). The Las Pinas Florita Trading, as shown in the table above, adheres to that
statement as they may be classified as one of the aforementioned small businesses. It
acknowledges the importance of cash budgeting to their operations by having only 1 of
the given standards on cash budgeting
unpracticed.
However, the forecasting of expenses and capital spending at least once per
quarter received 0 frequency percentage which signifies that this cash budgeting
procedure was not part of their cash management practices. Mentioned in the study of
Foster (2017), in Churchill and Lewis theory of elaborating the importance of selected
management factors of the small businesses by means of the five stages of development,
it is said that small business leaders begin in using the basic cash budgets or forecasts.
Such small action of forecasting holds such significance as it forms part of the budgeting
process which would be critical in the next stage.

1.2. Cash Collections
Table 2. Frequency Percentage of the Practiced Cash Collections

in Las Pinas Florita Trading
Cash Collection Frequency Percentage
Cash is counted and verified when received 2 100%
Only one cashier or person is able to access each cash
drawer at any given time so that cash will, at all times, be in 2 100%
the control or possession of one person
Cash drawers are assigned to one person and not shared to
2 100%
employees
Receipt is given for all transactions conducted in person
1 50%
whether by cash register or pre-numbered receipt
Duplicate copies of receipt are retained 2 100%
If applicable, cash summary is reconciled to the cash account
0 0
at the close of a shift
The following controls are used:
- Locked-in-totals?
- Vouchers are signed by owner/bookkeeper? 2 100%
- Voided copies of receipts retained for audit purposes?
- Cash drawers are locked during cashier’s absence
Invoices are accurate and sent timely to customers. 0 0
There is a monitoring for receivables from customers like an
aging report 0 0
The company provides different channels of collection of
payments from customers either through cash, checks, and
2 100%
bank transfers to give convenience and ease of transaction to
clients.
The company has set of policies regarding late payments. 0 0
The company actively communicates past due collectibles to
its clients. 0 0
The company assigns penalties for late payments. 0 0
The company offers payment plan for past-due clients by
2 100%
offering flexible payment terms.
The company offers discount for early payments. 0 0
Are cash shortages identified and recorded? 2 100%
If yes, what is the reason for shortages? 2 100%
● a. Delayed Collection of Payments 2 100%
● b. Sudden Cash Withdrawal 0 0
● c. Unrecorded Transactions 2 100%

Are recordsmaintained to identify changes
in shortage amounts? 2 100%
The table above presented the Frequency Percentage of the Practiced Cash
Collections in Las Pinas Florita Trading.
The practice of counting and verifying cash when received recorded a frequency
percentage of 100%. The table verified that the entity only has one person who can access
each cash drawer at any given time reason why cash is in control or in possession of only
one person and the statement that cash drawers are assigned to one person and not shared
to employees both have a frequency percentage of 100%. Receipt being given for all
transactions conducted in person whether by cash register or pre-numbered receipt
recorded a frequency percentage of 100 %. The duplicate copies of the receipts from all
transactions are retained by the entity and they also practiced having controls namely;
lock-in totals, vouchers being signed by the owner or bookkeeper, voided copies or
receipts are retained for audit purposes and cash drawers are locked during the cashier’s
absence. These statements were proven by their 100% frequency percentage. Likewise,
the company
providing different channels of collections of payments from customers either through
cash, checks and bank transfers to give convenience and ease of transactions to clients
also has a frequency percentage of 100%. The entity offers payment plan for past-due
clients by offering flexible payment terms. However, receiving also 100% frequency
percentage, the company identified and recorded cash shortages. Such shortages are
caused by the delayed collection of payments and some unrecorded transactions. But the
entity ensures that there
are records maintained to identify changes in shortage amounts.
Among the three variables under cash management practices, the policies and
procedures of cash collections done by the Las Pinas Florita Trading has the least
practiced percentage. Out of the given 18 standard cash collection practices, only eleven
(11) were actually done by the entity while the remaining seven (7) were unpracticed.
This is quite unlike the case on the preceding and following variables which only has 1
standard unpracticed. However, this could be considered reasonable because according to
Abioro (2013), the rule in managing cash flows is to accelerate cash collections and delay
disbursements. Therefore, it can be concluded that the Las Pinas Florita Trading has
fewer cash collections procedures in order to be able to quickly include cash in its balance
which
would have further effect on its performance ratio.
The reconciliation of the cash summary to the cash account at the close of a shift
whenever applicable is not done by the entity. It is because they might already have their
records. The invoices are not that accurate and are not sent timely to the customers which
also affected the monitoring of receivables from customers and their communication
about the past due collections to clients. These practices that are not done by the company
are the cause of not having policies, discounts and penalties regarding payments from
customers. All
of these practices not done by the entity were all evidenced by their 0% frequency
percentage.
According to the previous statement above, it could be argued that having fewer
cash collection policies is reasonable for a quick receiving of cash. However, it was also
found in the same study by Abioro (2013) that merely having cash or liquidity does not
guarantee a better financial performance for the firm, it would still require having proper
and effective cash management.
1.3. Cash Disbursements
Table 3. Frequency Percentage of Cash Disbursements

Cash Disbursement Frequency Percentage
Are deposit slips prepared in at least duplicate form? 2 100%
Are cash funds periodically counted on a surprise basis by an 0 0
independent employee?
Are surprise cash counts documented? 2 100%
Are all resulting discrepancies investigated and resolved? 2 100%
Are invoices matched to receiving reports and purchase orders? 2 100%
Is check signing restricted to employee without access to 2 100%
accounting records or cash?
Is access to vendor disbursements properly safeguarded prior to 2 100%
mailing?
Do you mostly pay for expenses in: 2 100%
- Cash
- Cheque
- Banker’s draft
The company maximizes strategies to slow down cash 2 100%
disbursements or delay payments within allowable period to
ensure sufficient cash
Are cash shortages identified and recorded? 2 100%
If yes, how does the company deal with the cash shortage? 2 100%
● a. Cut Expenses 2 100%
● b. Incur Additional cash 2 100%
● c. Convert Assets to cash 0 0
● d. Negotiate with suppliers regarding 0 0
the payment deadline
Are recordsmaintained to identify changes 2 100%
in shortage amounts?
The deposit slips of Las Pinas Florita Trading are prepared at least in its duplicate
form. The surprise cash counts are documented and the resulting discrepancies are
investigated and resolved. The practice of matching invoices to receiving reports and
purchase orders were done. The signing of checks is restricted to the employees who
doesn’t have access to accounting records or cash and the access to vendor disbursements
are properly safeguarded prior to mailing. The entity pays for its expenses mostly in cash,
check or banker’s draft. It also maximizes strategies to slow down cash disbursements or
delay payments within allowable period to ensure sufficient cash. The occurrence of cash
shortages is identified and recorded and in order to deal with them, the entity either cut
expenses or incur additional cash. Records are maintained in order to identify changes in
the amounts of shortage. The aforementioned cash disbursements procedure of the Las
Pinas Florita Trading has a frequency percentage of 100%
Cash funds being periodically counted on a surprise basis by an independent
employee is the only cash disbursement practice not done by the entity. The entity is
considered as a small-medium sized institution and could therefore not afford to have an
independent employee conducting such surprise cash count periodically.
Based on the table above, it could be concluded that the Las Pinas Florita Trading
is strict on its cash disbursement procedure having only 1 out of the 12 given standard
policies unpracticed. This could imply that the entity is adhering to such policies in order
to delay the release of cash. This strategy is called the “disbursement float” (Pandey,
2010). This could also be referenced to the rule in managing cash flows stating that cash
disbursements should be delayed (Abioro, 2013), wherein the financial managers are
delaying their cash payments
or disbursements because it would ensure a sufficient cash management (Pandey, 2010).
II. Financial Performance of Las Pinas Florita Trading in Terms of
Liquidity Ratios
The second objective of the study was to determine the level of financial
performance of Las Pinas-Florita Trading in terms of liquidity ratio. Thus, the business'
two consecutive financial statements, dated 2019 and 2020, were analyzed and interpreted
to
assess its overall performance.
The variables that comprise the liquidity ratio are as follows:
2.1 Quick Ratio
Quick Ratio = (Cash + Accounts Receivables + Trading Securities) /

Current Liabilities
2019 2020
130,557 (Cash) + 191,301.52 (AR) + 0 (MS) 100,863.30 (Cash) + 188,470.45 (AR) + 0 (MS)
59,686 (Current Liabilities) 69,358.35 (Current Liabilities)
= 5.39 = 4.17
The figure above shows that Las Pinas Florita Trading's quick ratio decreased the
following year. Despite the decrease, their quick ratio remains too high, indicating that
the entity can support its current liabilities. However, a high quick ratio indicates that the
company's cash is stagnant. It could indicate that the entity is not considering reinvesting
its assets or has not been putting them to productive use. The repayment to investors has
been ruled out because the entity is family-owned and thus has no investors to pay.
2.2 Cash Ratio
Cash Ratio = (Cash + Trading Securities) / Current Liabilities

2019 2020
130,557 (Cash) + 0 (MS) 100,863.30 (Cash) + 0 (MS)
59,686 (Current Liabilities) 69,358.35 (Current Liabilities)
= 2.19 = 1.45
As shown above, the cash ratio of the Las Pinas Florita Trading in both 2019 and
2020 was greater than 1. A healthy cash ratio should be in the range of 0.5 to 1. Even
though this was not the case, we can conclude that the company's most liquid assets can
meet the need to pay its short-term debts. However, the current cash situation in the
company is not ideal. Both 2019 and 2020 ratios exceeded the standard interval cash
ratio, implying that they
have an excessive amount of cash that appears to be static.
2.3 Net Profit Margin

2019 2020
Net profit margin = Net Profit Margin =
= 14.2% = 10.8%
Generally, the standard Net Profit margin varies depending on the industry of the
company. However, according to the rule of thumb, a 5% Net Profit margin indicates low
profit margin while 10% is considered healthy and a 20% Net Profit Margin is high.
Under the financial statements of Las Pinas Florita Trading, it has shown that
there is a decrease in their annual revenue as well as their net income. The net profit
margin percentage of 14.2% in 2019 has decreased the following year (2020) to 10.8%.
Technically, the company's net profit margin is average because it does not fall below
10% or exceed 20%. The drop in the percentage could be attributed to the fact that the
world is currently experiencing a global pandemic.
III. Summary of Results and Interpretation of Variables in the Study
Table 4. Summary of Results and Interpretation of Variables in the Study

Cash Management Practices Liquidity Ratio
Indicators Percentage VI Indicators 2019 2020
Cash Budgeting 75% Yes Quick Ratio 5.39 4.17
Cash Collection 61.90% Yes Cash Ratio 2.19 1.45
Cash Disbursements 81.25% Yes Net Profit Margin 14.2% 10.8%
Overall Percentage 72.72% Yes
Table 4 summarizes all of the variables in the study that are related to one another.
The first three columns discuss cash management practices and show the percentage of
each indicator along with a verbal interpretation. The last three columns show the
liquidity ratio of the business in consecutive years in order to analyze the effects of cash
management
practices on the performance of Las-Pinas Florita Trading.
According to the findings, Las-Pinas Florita Trading practiced 75% of cash
budgeting, 61.90% of cash collections, and 81.25% of cash disbursements. As it turned
out, the company’s quick ratio and cash ratio were (5.39) and (2.19) in 2019, before
falling to (4.17) and (1.45) in 2020, respectively. This implies that the entity can meet its
obligations, and either that the company has a successful policy in the sales and credit and
collectible policies, and this is good. However, even though their responses demonstrate
good cash flow management, they still lack the necessary cash management practices and
inconsistencies. Consequently, the company has an excess of liquidity, which is
unfavorable because it prevents them from investing that cash surplus to increase
profitability. These findings further support the findings of Charitou, et al. (2010) that the
good utilization of the firm’s resources, through management may result effectively and
efficiently to deal with a day-to-day business operation. According to the same viewpoint,
the cost of holding cash includes a low rate of return on assets due to the liquidity
premium and possibly a tax
disadvantage, whereas the benefit of holding cash is twofold: the firms save transaction
costs to raise funds and liquidate assets to make payments. As a result, the findings in this
paper add to the existing literature on the importance of proper cash management
practices in MSMEs.
Finally, Las Pinas-Floriita Trading practiced 72.72% of the commonly practiced
cash management in micro, small and medium enterprises and the net profit margin
percentage of 14.2% in 2019 has decreased the following year (2020) to 10.8%. Although
the decline could be attributed to the fact that the world is currently experiencing a global
pandemic, the company's net profit margin is average because it does not fall below 10%
or exceed 20%. This implies that with proper cash management in place, the financial
performance of Las Pinas-Florita Trading will in turn be satisfactory. However, Las
Pinas-Florita Trading must effectively and efficiently manage its costs. The surplus cash
could be managed into an investment portfolio. This would, in return, increase their
business’s sales and ultimately increase profitability. This is because cash management
influences financial performance for example if cash budgeting, cash collection, and cash
disbursements are emphasized when carrying out cash management then the financial
performance of MSMEs will be favorable. Therefore, the above findings show that cash
management is related to the financial
performance of Las-Pinas Florita Trading.

Chapter 6
SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATIONS
This chapter presents the summary of findings, conclusion of the study and the
recommendations for further research and future researchers.
Summary of Findings
The aim of the study was to determine the effect of cash management practices on
the financial performance of Las Pinas-Florita Trading. Cash Budgeting, Cash Collection
and Cash Disbursement were the variables used to measure the cash management
practices while the financial performance was measured in terms of liquidity ratio through
Quick Ratio, Cash Ratio and Net Profit Margin. This data was obtained from the two
consecutive financial statements of the company, year 2019 and 2020. The data analyzed
through
frequency and percentage distribution.
The cash management practices of the company were measured through frequency
percentage of the three variables, Cash Budgeting, Cash Collection and Cash
Disbursements. From the research findings, Las Pinas-Florita Trading practiced 75% of
Cash Budgeting, 61.90% of Cash Collections, and 81.25% of Cash Disbursement. Turned
out 72.72% of the commonly practiced cash management in small-medium enterprises.
But it should be understood that the percentage of the cash management practices which
were unpracticed is included in the data gathering because it is deemed to be significant
and therefore not practicing such may have its equivalent consequences.
However, the lower percentage in the cash management practices under cash
collection shows that there are lesser policies in collecting cash in order for it to
immediately
be included in the company’s financial statement while the higher percentage in cash
disbursements shows its strict policies on the release of cash. The findings implied that
the entity can meet its obligations, and that the company has a successful policy in the
sales and
credit, and collectible policies.
From the research findings, the financial performance of the company analyzed in
terms of liquidity ratios, the company's quick ratio and cash ratio were 5.39 and 2.19,
before falling to 4.17 and 1.45 in 2020, respectively. The net profit margin percentage
was 14.2 in 2019, and decreased the following year 2020 in percentage of 10.8. The
company's net profit
margin was still average since it does not fall below 10% and does not exceed 20%.
The high liquidity ratio of the Las Pinas Florita Trading shows that the entity has
an excessive amount of cash on hand which is not considered to be ideal for MSMEs.
Because it showed that the company’s cash is stagnant and the holding of excessive cash
might have a
significant effect on their return on asset.
Conclusion
The study aimed at establishing the effects of cash management practices on
financial performance of Las Pinas-Florita Trading.
1. The findings of the study showed that the cash management practices of
the company in terms of Cash Budgeting have a sustainable budget system that serves as
advantages for better financial performance and reliable in meeting their financial targets.
However, forecasting of expenses and capital spending was not part of their cash
management practices which is important to estimate their ongoing operational costs over
a period. This will help the business to plan out what are the risks to take and what will
they
have to work with the amount of money they have at any given time.
2. The Cash Collection done by the company has the least practiced
percentage. It can be concluded that they have fewer cash collections that affected their
financial performance and ratio. Fewer collections affected the cash collection of the
business since complete and on-time payments keep the business cycle flowing.
Therefore, delayed payments that leads to fewer collections may affect business to meet
operational and short-
term debt obligations.

3. In Cash Disbursement, the company is strict and adhering such policies
that delayed the release of cash in order to ensure a sufficient cash management.
However, counting cash funds periodically on a surprise basis by an independent
employee was the only cash disbursement practice not done by the entity. It implies that
there is no complete assurance that the total of cash, check and credit receipts for the day
is not equal to that time period’s business transactions. The purpose of this surprise cash
counts is to ensure that cash controls are adequate and in place over these funds.
Recommendations
Based from the results, the study proposes that the company should improve some
part of their cash management practices including the following:
The researchers recommend to MSMEs business to use this study as a basis of
comparison with their existing cash management practices and it may serve as a guide to
help them in assessing their implemented practices.
● The company must forecast expenses and capital spending to take control of
their cash flow in order to improve the financial performance and anticipate the
impact
of new expenses.
● All transactions must have receipts with corresponding date upon collection for
easily backtracking.
● Invoices should be recorded and reconciled daily and should also be forwarded
to
customers upon each transaction.
● Monitoring of receivables should be done perpetually to take control of cash

outflow efficiently.
● The entity must set policies regarding late payments such as:
✔ Providing extension for not being able to pay from the given cut-off
✔ Penalties for late payments
● The entity must update customers in their past due collectibles at least twice a
week.
The researchers recommend the future researchers to study on different areas with
connection to the cash management practices that are not scoped with this study.
Moreover, it is recommended to study on the connection not only focusing on MSMEs
but also in
other type of businesses.

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APPENDIX A
RESEARCH QUESTIONNAIRE
A. GENERAL INFORMATION
1.) Position in the business
{ } Owner { } Bookkeeper
2.) Indicate your highest level of education.

{ } Diploma or technical qualification (e.g. Dip. Acc. CPA. ACCA, Dip. Mgmt.)
{ } Undergraduate Degree (e.g., B.A., B.Sc., BCom)
{ } Postgraduate Degree (M.A., M.Sc., M.B.A., Ph.D.)
{ } Other, please specify: ____________________
3.) Age of the business
{ } Less than 2 years { } 2-5 { } 6-10 years { } More than 10 years
years
4.) Type of ownership
{ } Sole proprietorship { } Partnership
5.) Number of employees

{ } 1 to 5 employees
{ } 6 to 50 employees
6.) In your organization, who has responsibility for ensuring integrity and availability
of financial records and data?
{ } Full time { } Part time { } Owner/Manager { } Other: please
accounts staff accounts staff specify _______
B. CASH BUDGETING
BudgetingSystem Ye No
s
1. Does your company have a monthly or quarterly
budget versus actual reports?
2. Does having a budget system provide sustainable
advantages for better financial performance?
3. Does your company forecast expenses and
capital spending at least once per quarter?
4. Is the budget system reliable to meet the financial
targets?
C. CASH COLLECTIONS
Yes No
1. Is cash counted and verified when received?
2. Is only one cashier/person able to access each cash

drawer at any given time so that cash will at all times be
in the possession and control of only one person?
3. Are cash drawers assigned to one person and not

shared to employees?
- Is a receipt given for all transactions that are

conducted in person - whether by cash register
or pre-numbered receipt?
- Are duplicate copies of receipts retained?
- If applicable, is the cash summary reconciled to

the cash count at the close of a shift?
- Are the following cash controls used?
- Locked-in-totals?
- Vouchers are signed by the
owner/bookkeeper?
- Voided copies of receipts retained for audit
purposes?
- Are cash drawers locked during a cashier’s

absence?
- Invoices are accurate and sent timely to
customers.
- Is there monitoring for receivables from
customers like an aging report?
- The company provides different channels of
collection of payments from customers either
through cash, checks, and bank transfers to
give convenience and ease of transaction to
clients.
- The company has a set of policies regarding

late payments.
- The company actively communicates past due
collectibles to its clients.
- The company assigns penalties for late
payments.
- The company offers payment plans for past-
due clients by offering flexible payment terms.
- The company offers discounts for early
payments.
D. CASH DISBURSEMENTS
Yes No
1. Are deposit slips prepared in at least duplicate

form?
2. Are cash funds periodically counted on a surprise
basis by an independent employee?
3. Are surprise cash counts documented?
1. Are all resulting discrepancies investigated and

resolved?
2. Are invoices matched to receiving reports and

purchase orders?
3. Is check signing restricted to employees

without access to accounting records or cash?
4. Is access to vendor disbursements properly
safeguarded prior to mailing?
5. Do you mostly pay for expenses in:
- Cash
- Cheque
- Banker’s draft
6. The company maximizes strategies to slow

down cash disbursements or delay payments
within an allowable period to ensure sufficient
cash.
APPENDIX
B
CONSENT LETTER
June 3, 2021
Dolores L. Florita
Owner
Las Pinas-Florita Trading
Brgy. Riverside, San Pedro, Laguna
Permission to Conduct Research Study
Dear Ms. Florita,
We are writing to request permission to conduct research at your business Las Pinas-Florita Trading.
We are currently enrolled in Accountancy at City College Calamba in General Lim St., Calamba City,
and are in the process of writing our case study. Our study is entitled Effects of Cash Management
Practices on Financial Performance of Las Pinas-Florita Trading.
I hope that you will allow us to conduct surveys, and interviews and check reference documents that
will support the case study problem we will identify. Due to the nature of the study, we hope to gather
data through questionnaires or interviews that will be completed directly related to the case study.
Interested participants will be given a consent form to be signed at the beginning of the survey or
interview process.
If approval is granted, participants will complete the survey or interview at their convenience whether
online or via hard copy questionnaire, and at the time they prefer. The survey process should take no
longer than an hour and it will be scheduled beforehand. The survey results will be pooled for this
case study and individual results of this study will remain confidential and anonymous. No costs will
be incurred by either your business or the individual participants.
Your approval to conduct this study will be greatly appreciated. I will follow up with a telephone
call/text next week and would be happy to answer any questions or concerns that you may have at that
time. You may contact me at 09397112977 and bmcasipit@ccc.edu.ph.
If you agree, kindly sign below and return the signed form in the enclosed self-addressed envelope.
Sincerely, Ariz,
John Karlo N.
Caligan, Hanna Mae C.
Casipit, Beatriz M.
Daus, Jeremae S.
Researchers, Bachelor of Science in Accountancy
Department of Business and Accountancy
Approved by: Date Signed: 06-11-2021

APPENDIX
Dolores L. Florita
Owner, Las Pinas-Florita Trading
C VICINITY MAP
OF LAS PINAS-FLORITA TRADING
D
FINANCIAL STATEMENTS OF LAS
PINAS FLORITA TRADING
APPENDIX
2019-2020
APPENDIX E - RESEARCH FORMS

Research Form 1- Adviser’s Acceptance form
Department of_______________________________________Business and Accountancy Group

No. ________________8
Group Members ___________________________________________________________________John

Karlo N. Ariz, Hanna Mae C. Caligan, Beatriz M. Casipit, Jeremae S. Daus
Title of Research
Paper_____________________________________________________________
_Effects of Cash Management Practices on Financial Performance of
______________________________________________________________Las
Pinas-Florita Trading
I do hereby accept the invitation of the above-mentioned students to become their Research
Adviser for the Academic year _________.2021-2022 Concomitant with this is my acceptance of the
following functions and responsibilities:
1. Attend the orientation meeting scheduled by the Program Director.

2. Assist the student researchers in the selection of their topics.
3. Guide and monitor the student researchers in their works in accordance with the timetable or
working table
4. Check and improve the submitted proposals, questionnaires, and all aspects of the research paper
5. Provide and sustain the technical, ethical and more direction and conduct of the student research
6. Prepare the advisees for the final oral defense through mock defense
7. Monitor the participation of group members during consultation and in every aspect of research
work, and keep a record of consultations conducted
8. Resolve group problem/s arising in the preparation of the research paper
9. Schedule at least one hour consultation time every week
10. Ensure quality control of the research output of student researchers
11. Endorse for final defense the final manuscript by affixing signature on the prescribed form
12. Be present during defense although I am not supposed to participate in the defense
13. Assist and supervise the student researchers in the final revision of the manuscript as
___________________________
Signature
OverPrinted
Name
recommended by the panel
__________________05-12-2021
Date Signed
___________________
Research
Facilitator
RichieV. Mendoza,
MAEd
___________________________________
VicePresident
forResearch
andInnovation
Noted:_____________________________Aurea B. Natividad, CPA, MBA
Program Director
Approved:
Research Form 2- Language Editor’s Acceptance Form
Department of _Business and Accountancy______________ Group No. _8___________
Group Members _John Karlo N. Ariz, Hanna Mae C. Caligan, Beatriz M. Casipit, Jeremae S. Daus_
Title of Research Paper _The Case Study of Cash Management Practices of Las Pinas-Florita
Trading and the Effects on Financial Performance__
I do hereby accept the invitation of the above mentioned students to become their Language
Editor for the Academic year _2021-2022_. Concomitant with this is my acceptance of the following
functions and responsibilities:
1. Edit thoroughly the manuscript of the student researchers

2. Discuss with the research group/s the corrections, comments, and suggestions made on the
manuscript in terms of the prescribed formats, correctness of grammar, and clarity and
formality of language used
3. Monitor and assure the incorporation of the corrections and revisions made on the manuscript
of student researchers
4. Endorse for final defense the final manuscript by affixing signature on the Language Editor
Form
___________________________Danica R. Millario, MAEd
Signature Over Printed Name
__________________12-03-2021
Date Signed
___________________ Noted:_____________________________Aurea B. Natividad,

CPA, MBA
ResearchFacilitator
Program Director
Approved:_____________________________________Richie V. Mendoza, MAEd
Research Form 3 – Endorsement for Oral Defense Form
Department of_______________________________________Business and Accountancy Group

No. _________________8
Group Members
____________________________________________________________________John Karlo N. Ariz,
Hanna Mae C. Caligan, Beatriz M. Casipit, Jeremae S. Daus
This thesis attached hereto entitled ______________________________________Effects of

Cash Management Practices on Financial__________
_____________________________________Performance of Las Pinas-Florita Trading is

hereby endorsed for final defense. Our
signatures below attest to the acceptability of the manuscript for oral defense and compliance of
all pertinent requirements and obligations of the student researchers.
________________________ ___________________________04-07-2022
Adviser Date Signed
___________________________Danica R. Millario, MAEd______________________________04-07-2022
Language Editor Date Signed
___________________________ ______________________________04-07-
2022
Research
Facilitator
Date Signed
(please do not fill out. For Research Facilitator’s use only)
Date of Oral Defense: ________________________ Time: ________________
Venue: ____________________________________
Research Form 4 – Panelist’s Acceptance Form
( / ) Business and Accountancy Department
of ( ) Computing and Informatics
( ) Arts & Sciences
( ) Teacher Education
I do hereby accept the invitation to become a research defense panelist on

______________________________________________April 9, 2022, 7:00 AM (date, time and
venue) for the academic year _________________.2021-2022
Signature Over Printed Name Date Signed

__________________________Ellen ____________________04-07-2022
C. Almoro, CPA, MBA
_____________________ Noted:__________________________Aurea B. Natividad,
CPA, MBA
Research
Facilitator
Program Director

( ) Arts & Sciences


__________________________Ronnelson ____________________04-
Pascual, CPA 07-2022
_____________________ Noted:__________________________Aurea B. Natividad,
CPA, MBA
Research
Facilitator
Program Director
( ) Arts & Sciences

__________________________Regina G. Almonte, PhD____________________04-07-2022
Noted: _____________________ __________________________Aurea B. Natividad, CPA, MBA
Research Facilitator Program Director
Research Form 5 – Research Topic Acceptance From
The CCC Research and Innovation Office in coordination with the technical panel from the
Department of ______________________________Business and Accountancy has recently
reviewed and approved your research topic/tentative title outlined below.
Research Topic/Tentative Title Effects of Cash Management

Practices on Financial
Performance of Las
PinasFlorita Trading
HNRDA Section and Research theme (aligned to the Business Operations
CCC Research Agenda)
Authors Ariz, John Karlo N., Caligan,

Hanna Mae C., Casipit, Beatriz
M., Daus, Jeremae S.
Approval Date 07-09-2021
07-09-2021
________________________ ___________________________
Adviser Date Signed
07-09-2021
___________________________ __________________________
Research Facilitator Date Signed
Noted:_____________________________Aurea B. Natividad, CPA, MBA

Program Director

Research Form 6- Research Statistician’s Acceptance Form
Department of _Business and Accountancy______________ Group No. _8___________
Group Members _John Karlo N. Ariz, Hanna Mae C. Caligan, Beatriz M. Casipit, Jeremae S. Daus_
Title of Research Paper _The Case Study of Cash Management Practices of Las Pinas-Florita
Trading and the Effects on Financial Performance__
I do hereby accept the invitation of the above mentioned students to become their Research
Statistician for the Academic year _2021-2022_. Concomitant with this is my acceptance of the
following functions and responsibilities:
1. Guide the students in choosing the most appropriate statistical tool/s for their study.
2. Guide the students in the preparation of research instruments together with the research adviser.
3. Process the data of the students using the most appropriate statistical tool/s.
4. Assist the students in the preparation of the statistical report (tables and figures) following the APA
format.
5. Assist the students in the analysis and interpretation of the results.
___________________________Richie V. Mendoza, MAEd
Signature Over Printed Name
__________________05-20-2022
Date Signed
Noted: ___________________ _____________________________Aurea B. Natividad, CPA, MBA
Research Facilitator Program Director
APPENDIX F TURNITIN
RESULT
APPENDIX G RESEARCHERS’ CURRICULUM VITAE

John Karlo N. Ariz

Canlubang, Calamba, Laguna
09214847683 jnariz@ccc.edu.ph
PERSONAL INFORMATION
Birthday : October 02,
1999
Age : 22y/o
Nationality : Filipino
Civil Status : Single
Religion : Roman Catholic
Father’s Name : Leonilo Ariz
Mother’s Name : Rizza Ariz
EDUCATIONAL BACKGROUND
Tertiary : City College of Calamba
Calamba City, Laguna
Bachelor of Science in Accountacy
2018 – present
Secondary : Kapayapaan Integrated School
Accountancy, Business & Management
(ABM) 2016 - 2018
JohnKarloN. Ariz
Researcher
Hanna Mae C. Caligan

Majada Out, Calamba, Laguna
09123729159 hccaligan@ccc.edu.ph
Birthday : August 4, 2000
Age : 22y/o
Religion : Roman Catholic
Father’s Name : Fiderico D.
Caligan
Mother’s Name : Lysa B. Castro
2018 – present
Secondary : Camp Vicente Lim Integrated
School
General Academic Strand (GAS)
2016 - 2018
Hanna Mae C. Caligan
Researcher
Beatriz M. Casipit
09397112977 bmcasipit@ccc.edu.ph
Birthday : April 5, 1999
Age : 23y/o
Religion :
Roman Catholic
Father’s Name :
Dionicio C.
Casipit
Mother’s Name : Lorna M. Casipit
2018 – present
Accountancy, Business & Management
(ABM) 2016 - 2018
Beatriz M. Casipit
Researcher
Jeremae S. Daus
09268854729 jsdaus@ccc.edu.ph
Birthday : June 23, 1999
Age : 23y/o
Religion : Born Again
Father’s Name : Virginio B.
Daus
Mother’s Name : Maryann S.
Daus
2018 – present
Science, Technology, Engineering, and
Mathematics 2016 - 2018

Jeremae S. Daus
Researcher

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CITY COLLEGE OF CALAMBA

DEPARTMENT OF BUSINESS AND ACCOUNTANCY

EFFECTS OF CASH MANAGEMENT PRACTICES

A Thesis presented to the

BACHELOR OF SCIENCE IN ACCOUNTANCY

Ariz, John Karlo N.

This thesis hereto entitled:

CITY COLLEGE OF CALAMBA

Effects of Cash Management Practices on Financial Performance

Approved by the Committee on Oral Examination with a grade of _____________

ELLEN C. ALMORO, CPA, MBA

RONNELSON PASCUAL, CPA REGINA G. ALMONTE, PhD

Accepted in partial fulfillment of the requirements for the degree, Bachelor of

RICHIE V. MENDOZA, MAEd

This certifies that the thesis entitled,

CITY COLLEGE OF CALAMBA

College of Calamba by the undersigned.

RICHIE V. MENDOZA, MAEd

Certificate of Grammar Editing

This certifies that the thesis entitled,

CITY COLLEGE OF CALAMBA

subjected to Grammar Editing at City College of Calamba by the undersigned.

DANICA R. MILLARIO, MAEd

CITY COLLEGE OF CALAMBA

complete and possible:

semester for willingly providing moral and financial support.

insightful feedback on this study.

May God bless you all to God be the glory.

CITY COLLEGE OF CALAMBA

Population of the Study 24

CITY COLLEGE OF CALAMBA

development and employment generation. The implementation of sound cash

management practices is essential to ensure their profitability and sustainability. This

bookkeeper. A descriptive survey was used. Researchers conducted an interview and

CITY COLLEGE OF CALAMBA

and cash disbursement have favorable financial performance consequences.

Keywords: MSMEs; Cash Management Practices; Financial Performance; Liquidity;

THE PROBLEM AND ITS SETTING

Background of the Study

Cash management is basically the management of cash collection, concentration

an entity’s business cycle because it helps improve their performance on profitability. In

budgeting, cash collection and cash disbursement.

Furthermore, the liquidity and profitability being measured in the cash

management activity relates to the definition of financial performance, as it is defined as

deals with the management of the

most liquid asset.

Las Pinas-Florita Trading is a family-owned business based in San Pedro, Laguna

million pesos and

remains in business up until today.

additional investment in order to have

sufficient amounts of cash.

Having a proper cash management practice is important to any type of business as

regarding their current management.

Statement of the Problem

financial performance of Las Pinas-Florita trading.

Specifically, it sought to answer the following questions:

1.1 Cash Budgeting

1.2 Cash Collection

1.3 Cash Disbursement

2. What is the financial performance of Las Pinas-Florita Trading in terms of liquidity

2.1 Quick Ratio

2.2 Cash Ratio

2.3 Net Profit Margin