Asked by Eunice Gwendolyn on Jul 08, 2024
Verified
Management's desire to maintain a low cash balance affects their need to borrow money.
Low Cash Balance
A situation where an individual or organization has a minimal amount of cash on hand, potentially affecting their ability to cover short-term liabilities.
- Recognize the role of cash flow uncertainty and management's cash balance preferences in borrowing decisions.
Verified Answer
JW
Jordan WaldropJul 10, 2024
Final Answer :
True
Explanation :
A low cash balance may necessitate borrowing to cover short-term needs or unexpected expenses, as there are fewer liquid assets available to meet financial obligations.
Learning Objectives
- Recognize the role of cash flow uncertainty and management's cash balance preferences in borrowing decisions.
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