Cash and cash equivalents are deliberated as one of the most important component of current assets and are required to sustain the corporate financial management of any firm. A considerable part of the assets of the firms is held by the managers in form of cash and liquid securities for reinvestment in order to purchase the assets and to payout the dividends to shareholder and to backup cash for the company (Almeida et al, 2004). The pattern of the corporate cash holding is usually explained under trade-off model, pecking order theory and free cash flow theory. Corporate cash holding is very important in corporate finance. According to Mayer (1990), cash reserves are used for almost 75% of total net financing instead of equity, convertibles and debt. So we can say that understanding firm’s cash policies is important in order to understand the financing decision of the firm. Supervisor:- Dr. Attiya Yasmin Javid