Asked by Latoya Alexander on Jul 18, 2024
Verified
Excessive short-term financing is a primary reason why firms have cash surpluses.
Short-term Financing
Funding obtained to meet immediate to short-term (up to one year) financial obligations and operational expenditures of a business.
Cash Surpluses
Excess cash that a company generates beyond its needs, which can be used for investment, dividends, or to strengthen the balance sheet.
- Investigate the key factors contributing to businesses holding cash reserves, including the financing of projected expenses and the investment of resources.
Verified Answer
JF
Jasmyne FaildsJul 21, 2024
Final Answer :
False
Explanation :
Excessive short-term financing typically leads to cash shortages or liquidity issues, not cash surpluses, as firms must frequently repay and renew such financing.
Learning Objectives
- Investigate the key factors contributing to businesses holding cash reserves, including the financing of projected expenses and the investment of resources.
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