Asked by Nachelle Culpepper on Apr 25, 2024
Verified
The objectives of cash management include to:
A) earn a return.
B) hold cash to a minimum consistent with efficient operation.
C) ensure adequate liquidity.
D) Both b & c.
E) All of the above
Cash Management
Cash management involves the collection, handling, and usage of cash. It aims to manage a company's short-term financial stability and liquidity.
Adequate Liquidity
The ability of an entity to meet its short-term financial obligations with its readily available assets.
- Gain insight into the purposes and financial burdens of managing cash holdings in a corporation.
- Gain an understanding of the theories and varieties of cash demand, covering transactional, precautionary, and speculative motives.
Verified Answer
MM
Mannat Miglani7 days ago
Final Answer :
D
Explanation :
The objectives of cash management include holding cash to a minimum consistent with efficient operation (B) to avoid unnecessary holding costs and ensuring adequate liquidity (C) to meet financial obligations as they arise. Additionally, earning a return (A) is important in optimizing cash utilization but it is not always the primary objective of cash management. Therefore, option D, both b & c, is the best answer. Option E, all of the above, is not accurate because earning a return is not always a primary objective of cash management.
Learning Objectives
- Gain insight into the purposes and financial burdens of managing cash holdings in a corporation.
- Gain an understanding of the theories and varieties of cash demand, covering transactional, precautionary, and speculative motives.