What are the Merits or Advantages of Maintaining a Petty cash Book especially in large establishments?

The major benefit  is to avoid lengthy procedure and arrange quick payment for small and petty expenses Only

Reasons to retain cash:

Select economic John Keynes three major incentives to retain economic unity exchange are:

1. incentive operations: cash intended for this purpose, is maintained by the institution of cash to meet the needs of its normal operations, such as pay for purchases and wages of workers. This depends retained for this purpose on the size of the institution and the long time between the dates of entry cash to the institution and dates of leaving them Monetary size, and the extent of stability in cash flows.

Some institutions may be possible to reduce retained cash for the purposes of operations by reducing the time span between the cash entry and exit, and through precision in synchronization between the cash inside it and outside of them, especially in the institutions that are characterized by their cash flow stability, such as the two electricity and telephones. As for cases where cash flow is characterized by instability and electrical appliances such as the trade of luxury goods, the cash requirements for operations to be high because of expected and unexpected large vibrations in cash inside.

2. incentive reserve: the intended cash for this purpose is maintained by the institution to meet the unusual circumstances, and it is often retained for this purpose in the form of deposits tied or quick bleed to reduce the profit lost opportunities securities exchange, the amount of cash required for this purpose in the light of the accuracy and determines irregular cash flow of the institution concerned. If the cash flows regularly, can be kept low reserves, and if the contrary should be kept high cash reserves.

There is another factor that plays a role in determining retained for this purpose cash, the institution's ability to borrow when the need arises during a very short period of time, as well as ceilings unused from their facilities, depending on the financial institution development and its relations with banks and financial institutions.

3. incentive speculation: the most positive of that is providing the ability to take advantage of profit possible opportunities if suddenly occurred, and such a goal is important for many of the institutions that do not bother with such acts, so that the focus is always directed towards the core business, but it is strong at individuals who are always looking for profitable investment opportunities.

Advantages of the appropriate size of cash:

Besides the three incentives to retain cash, the working capital sound management also require retention appropriate quantity for achieving a set of specific advantages, including:

1. the possibility of the institution for commercial discounts when you buy goods they handle, either as a result of the cash payment or to pay within the period allowed for a discount.

2. The credit rating of the institution improved by showing good liquidity ratios approach to the rates prevailing in the industry to which it belongs.

3. Improving the opportunity to benefit from the favorable working conditions and opportunities with the organization from time to time.

4. The possibility of emergency interview like wildfire and marketing problems and rapid expansion.

Agreed with the answer, Mr. George