The previous researches explore the question of why firms hold cash. But there are few
researches done in developing countries like Pakistan. The need for cash is characterized by its
policies of firms regarding capital structure, working capital requirements, cash flow management,
dividend payments, and asset management. In this paper, the impact of these factors is normally
analyzed under the framework of Tradeoff theory, Pecking Order Theory and Free Cash Flow Theory.
This paper focuses on determining the level of corporate cash holdings of non-financial Pakistani
firms, and cash holding requirement among different industries. The data is set for period of 2008-
2012 by using the data of 40companies and 6 industries. The findings of the study support the
theories. Which show that firm size, net working capital, leverage, Capital Expenditure and Dividend
significantly affect the cash holdings of non-financial firms in Pakistan