A company that maintains a cash balance of more than is necessary for its day-to-day needs
A)is likely to have cash flow problems.
B)is not using working capital to its ideal advantage.
C)is likely to have a very low solvency.
D)has a problem with physical controls.

Question

Quizplus · Accepted Answer

Maintaining excess cash balance means the company is not utilizing its working capital efficiently. Instead of keeping the excess cash idle, it could be invested in projects that would generate a higher return on investment. This would benefit the company in the long run.

A Company That Maintains a Cash Balance of More Than