The target cash balance should be set so that it need not be adjusted for either seasonal patterns or unanticipated fluctuations,although it should be adjusted to reflect long-term changes in the firm's operations.

Question

Quizplus · Accepted Answer

The target cash balance should be adjusted for seasonal patterns and unanticipated fluctuations to ensure the firm has enough liquidity to meet its obligations and to take advantage of investment opportunities, in addition to adjustments for long-term changes in operations.

The Target Cash Balance Should Be Set So That It