Asked by Frederick Schneider on Jul 06, 2024
Verified
A firm has a greater likelihood of needing an unexpected loan when its cash flows are relatively constant over time.
Cash Flows
The net amount of cash being transferred into and out of a business, used as an indicator of financial health.
- Identify the impact of uncertainties in cash flow and the preferences of management for cash balances on the decisions related to borrowing.
Verified Answer
JN
Janette NicoleJul 10, 2024
Final Answer :
False
Explanation :
A firm with relatively constant cash flows is generally more stable and predictable, reducing the likelihood of needing unexpected loans compared to a firm with highly variable cash flows.
Learning Objectives
- Identify the impact of uncertainties in cash flow and the preferences of management for cash balances on the decisions related to borrowing.
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