The main reason why companies want to maintain a minimum cash balance is:
A)cash,in and of itself,can earn a very high rate of return.
B)they are required by law.
C)to make sure there is a pool of cash available to deal with an expected need.
D)the balance sheet always needs to reflect a cash balance.

Question

Quizplus · Accepted Answer

Companies maintain a minimum cash balance to ensure that there is a pool of cash available to deal with expected needs, such as payment of salaries, payments to vendors, or unexpected expenses. This helps to ensure that the company can continue operations without interruption. While cash can earn some return, it is not typically a high rate of return and is not generally the primary reason for maintaining a minimum cash balance. Companies may also be required by law to maintain a certain level of cash, but this is not generally the main reason. The balance sheet does need to reflect a cash balance, but again, this is not generally the primary reason why companies maintain a minimum cash balance.

The Main Reason Why Companies Want to Maintain a Minimum