With respect to cash flow, a firm ideally should have which of the following?
A) a constant need for short-term financing
B) a need for short-term financing only two to three times a year
C) more cash flowing out than in, because this represents growth
D) enough money coming into the firm to cover the expenses in that period

Question

Quizplus · Accepted Answer

It is ideal for a firm to have enough money coming in to cover its expenses in that period, as this indicates positive cash flow and financial stability. A constant need for short-term financing or more cash flowing out than in can indicate potential financial difficulties. While needing short-term financing a few times a year is not necessarily a negative, it is not as ideal as having enough cash on hand to cover expenses without relying on borrowing.

With Respect to Cash Flow, a Firm Ideally Should Have