Firms may retain large amounts of cash to cover future potential needs that allows a firm to avoid ________.

Name: Firms may retain large amounts of cash to cover future potential needs that allows a firm to avoid ________.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Retaining large amounts of cash allows a firm to avoid transaction costs and financial distress costs by having a cushion to cover unexpected expenses or economic downturns. It does not necessarily have an impact on tax payments or clientele effects.

Firms May Retain Large Amounts of Cash to Cover Future