WACHEMO UNIVERSITY COLLEGE OF BUSINESS AND

ECONOMICS DEPARTMENT OF ACCOUNTING AND

FINANCE

CASH MANAGMENT PRACTICE IN COMMERCIAL BANK

OFETHIOPIA
(A CASE STUDY ON SELEMEBANK BRANCH)

AN RESEARCH PROPOSAL PAPER SUBMITTED IN PARTIAL

FULFILMENT OF B.A DEGREE IN ACCOUNTING AND
FINANCE

NAME Id

1. Zinaye-Shure 1309053

Advisor;-Elias.M

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 2024 G.C Hosanna, Ethiopia

Index

CHAPTER ONE
1.Introduction…………………………………………………..................
.......4
1.1 Background of the Study ....................................................4
1.2 Background of the Organization ........................................4
1.3 Statement of the Problem...................................................5
1.4ObjectivestheStudy……........................................................
...6
1.4.1 General Objective .....................................................…...6
1.4.2SpecificObjectives………………………………....................
.........6
1.5 Significance of the Study ...................................................6
1.6ScopeoftheStudy.....................................................................6
1.7LimitationoftheStudy.............................................................6
CHAPTER THREE

3.Research methodology and

Design…………………………............……7
3.1 Area of the Study…............................................................... 7
3.2 The Research design ….………………………………………………......7
3.3 Data type and source……… …………………………….....…………..7
3.4 Method of Data collection………………………………….....………8
3.5 Sample Size and Sampling Technique….……………...……….…8

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3.6 Data Analysis and Presentation ……………………………………8
4. Time and Budget schedule ………………………………………...…….9
4.1. Time schedule ……………………………………………...………9

4.2. Budget schedule …. …………………………………………....9

Reference.......................................................................................10

CHAPTER ONE
1. Background of the Study

Cash is a medium of exchange that the bank will accept for deposit and immediate
credit to depositor account that include currency and coins, personal checks, bank
drafts, money order credit cards, select drafts and so on (Planket, 1986).
Cash management is one part of the financial management system. It is a proper use of
an entities cash resource, since the bank play a major role in facilitating the way of
financial sector operates with banks utilize. Cash is important for understanding not only
banking behavior but also for the role that the bank play in the transmission mechanism
by effective cash management banks can reduce cash balance at the minimum level
and at the same time customers requirement can be insured banks are business
established that safeguard can be insured banks are business established that safeguard
people’s money and use it to loan and investment, cash management services as the mean
to keep the bank functioning by making the best use of cash or liquid resources of the
bank. Therefore banks are very much interested in establishing procedure for increasing
the efficiency of their management. Among the procedure carefully prepared cash forces
(short-term and long term) and investment of idle cash is the major ones. (WWW. Docstoc.
Com 2:00 PM).

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Commercial Bank of Ethiopia gives various type of service to their customers for example
the mobilization of financial resources and lending the resources to the business
community mobilization of financial resource arise from the fact that the amount of
productive investment is very low. In order to receive financial constraints on investment
financial intermediaries are expected to play a deceive roleis brining about efficient way of
rising the required level of funds through application of proper financial management
system. There for financial managers how cash the bank should carry, the specific types of
securities to issue and how Mach of the firms earning to Retain versus to pay dividends,
(www.com bank eth.com)

1.3 Statement of the Problem

Management is responsible for controlling and protecting of the business like
inventory, receivables, plant assets and cash. Cash management is one part of
financial management system that focus on internal control and forecasting the future
cash requirement. (www. Investopedie –com.6:00 pm).
Cash is the most important element of banks day today activity. By effective cash
management banks can reduce the excess cash at optimum level and ensure customers
requirements. Cash management involves neither excess not deficient amounts of cash on hand
at right time proper cash management requires that the bank know how much cash is need as
well as how much it has and where that cash is at all-time. Cash management also require
knowing the amounts of fund available for investment and the length of time that can
be must.(Planket, 1986).Banks are increasing becoming innovative and anticipating the needs
of corporate towa rds standardization, enterprise resources planning integration,
reconciliation, real time reporting, providing an end vie was cash management value chain
besides offering the ability to reach and be reached their own customers the mounting
pressure from competition forces the banks to look an information technology vendor who
offer better solution and services in cash management (www.Hcltech. Com. 9:50 am at
local). Even though, cash management receive a priority for financial institution
especially Commercial Banks little is known how effectively monitor its cash flow,

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how to accelerate collection receipt and optimize timing of disbursement, maximizing
interest relate collection receipt and optimize timing of disbursement, maximizing interest
earning and properly secured investment.

There for this study w i l l b e tried to investigate a solution for the following basic
research questions.
1. What are the source of short term financing used by CBE?
2. How the bank control cash receipt and disbursement?
3. Does the bank have idle cash?
4. Does the bank has cash budget?
5. Does the bank possess cash shortage?
CHAPTER THREE
1.4 Objective of Study

1.4.1 General Objectives

The general objective of the study will be focus on the cash management practices in
Commercial bank of Ethiopia Seleme branch.

1.4.2 Specific Objectives

 To identify the source of short term finance in the bank.

 To assess the internal control of cash receipts and disbursement.
 To assess the bank’s its cash budget.
 To identify and asses idle cash its investment area.
 To compare theoretical aspect of cash management practice with in actual practice of
CBE.

1.5 Significance of the Study

This study will be benefit Commercial bank of Ethiopia Seleme branch.by identifying factors
that affect the internal control over cash and suggesting possible recommendation.

It also reflects the researcher cash management practice of Commercial bank of Ethiopia Seleme
branch. With its limitation and weakness and gives possible communicative idea or solution as to

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how the financial manager of the banks of Commercial bank of Ethiopia Seleme branch. Will
be control its cash under the proper management of cash.

1.6 Scope of the Study

Here the researcher knows that the study will be includes the whole banks cash management
practice but time and financial constraints the researcher forced to focus on the assessment of
cash management practices of Commercial bank of Ethiopia Seleme branch.. After this study the
community will be expected to compare the cash management practice of CBE with theoretical
aspect of cash management and it there is cash management problem give possible solution
(Advices).

1.7 Limitation of the Study

During the collection of data for this study purpose the researcher will be face different
limitation, like voluntariness of the concerned people to give the information and there are also a
time constraint to do this study.

3. Research Methodology and Design

3.1 Area of the Study

The study will be conducted on the cash management practice of commercial bank of
Commercial bank of Ethiopia Seleme branch.

3.2 The Research Design

For this study descriptive design type of research, will be going to be used. Because, the aim of
the study will be describe the actual cash management practice of Commercial bank of Ethiopia
Seleme branch.

3.3 Data Type and Source

For this study, the researcher will be both quantitative and qualitative data type especially the
later one. The researcher also use both primary and secondary source of data.

3.4 Method of Data Collection

For primary method of data collection observation and unstructured interview will be rather than
other method of data collection because in order to understand the real cash management practice

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need to observe the activities. The secondary data will be collected by reviewing the company
published and unpublished journals, magazines and reports.

3.5 Sample Size and Sampling Technique.

From a total population of Twenty five employees of CBE 6 employees will be selected as ample
size by using judgmental sampling techniques-Because this 6 employees will be especially
engaged in the area of cash management practice.

3.6 Data Analysis and Presentation

After necessary data will be collected from the primary source and secondary sources the data
will be processing and analyze data processing is an activity which involves interpretation data to
make the data appropriate for analysis. Data analysis will be done both by using qualitative and
quantitative data processing from the data get the data presenting would be descriptive data
presentation by using tables and others

1.9 Organization of the Study

This study will be contain five chapters. The first chapter deals with background of the study,
statement of the problem and research question(s), objective of the study, significance of the
study, , scope and limitation of the study and organization of the study. The second chapter
contains literature review related to loan processing and credit analysis. The third chapter
contains research methodology. The fourth chapter contains data presentation analysis and
interpretation, and the fifth chapter contain about summary of finding, conclusion and
recommendation.

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1.10. Time and Budget schedule
No. Activities December January February March April May

Weeks Weeks Weeks Weeks Weeks Weeks

1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
1 Project
proposal and
approval
2
Data Collection
3 Data
arrangement

4 Design

5 Data
Implementatio
n
6 Documentation
of the study
7
Sumiton of the
paper
8
project
Defense

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1.10.2. Budget schedule

Number Item Measurement Quantity Unit price Total cost Remark

in in birr
Ethiopian
birr
1 Stationary Birr For all 800.00
2 Transport Tripe - - 100.00
3 Printer Paper page 200 1.50 300.00
4 Flash disk Number 01 300 300.00
16GB
5 contingenc Birr 10% 150.00
y
Total 1650.00

REFERENCES

1. Arenas. Lobes. 2001. Auditing integral Approach 9th. Edition.

2. Bringham.F, 1995. Fundamental of financial Managing 7th edition
3. Dave’s, Dukes, Dychkam. 1995. Intermediate Accounting 3rd edition
4. Kieso. Weygadite, war filed.2001. Principle of Auditing 9th edition.
5. Kockw, timothy, mach Donald.1995. Bank management 4th edition
6. Planket. 1986. Fundamentals of managerial finance 2nd edition.
7. Raymond, P. Nevell 1985 fundaments of managerial finance 7th edition.
8. Rose Stephen. 1995. Fundamental management and corporate finance 4th edition

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