Abstract

Cash holding plays a crucial role in corporate financial management, as it reflects a firm's ability to meet liquidity needs, manage risk, and seize investment opportunities. This study aims to examine the effect of net working capital and leverage on cash holding, motivated by the varying cash policies observed across firms. The research uses a quantitative approach with panel data regression employing the Fixed Effect Model (FEM). The sample consists of 26 company observations over five years. Data analysis is conducted using EViews 12 software. The regression results indicate that leverage has a significant effect on cash holding, while net working capital does not exhibit a significant impact. The positive effect of leverage on cash holding; suggest that firms with higher debt levels tend to retain more cash as a buffer against financial risk. These findings contribute to financial decision-making related to optimal cash management and highlight the importance of both internal and external factors in shaping corporate liquidity policies.

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