Examining Free Cash Flow To Manage A Company’s Financial Flexibility

Cash management may become a factor thataffects a company's profitability. A high amount of cashwill result in idle cash that decreases the company’sability to generate optimal returns, while the lowamount of cash may result in losing the opportunity tomeet its obligations. This research uses a quantitativedescriptiveanalysis. Of the 10 financial report SME'ssurveyed in 2010, only five companies are able meet thebasic needs of their capital expenditures incurreddividend paid; while four companies are not even ableto meet the primary needs because it generates negativefree cash flow, and one company unable to meet the freecash flow in 2010. All companies are advised to countand prepare cash flow report as well as free cash flowreports by themselves so they can decide on the amountof cash that should be held in the balance sheet.