Which statement is not true?
A) A firm should always have a surplus holding of cash.
B) If a firm has a cash surplus, it should make the best use of the surplus.
C) If a firm has a cash deficit, it may need to reschedule its cash payments.
D) If a firm has a cash deficit, it may need to arrange to borrow money.

Question

Quizplus · Accepted Answer

It is not always necessary for a firm to have a surplus holding of cash. The ideal level of cash holding depends on various factors such as the nature of the business, industry trends, and market conditions. Maintaining a large cash balance can sometimes be costly and may reduce profitability.

Which Statement Is Not True