Abstract:

Cash holding is a critical decision in any corporation around the globe. The main purpose of this study is to explore the determinants of cash holding decision in food industry of Pakistan. To obtain the objectives of this study data were collected from the web site of State Bank of Pakistan over a period of 10 years (2006 to 2015) of 39 food companies. The current study used correlation analysis, descriptive statistics and pooled ordinary least square regression model for analysis of selected firms. The empirical results of the research revealed that Cash flow; Leverage and Liquidity have a negative and significant relationship with cash ratio. Moreover, Return on Assets and size has significantly positive relationship with cash ratio. Finally, the dividend payout ratio and cash ratio has insignificant positive association. The results of this study will help to the management for make right decision to hold right amount of cash holding.