Terminator, Inc. keeps excess cash on hand in case of an industrial accident in the manufacturing of its wheat herbicide. This is an example of a ____________ for holding cash.

Question

Quizplus · Accepted Answer

This is an example of a precautionary need for holding cash. Companies keep excess cash to cover unexpected events or emergencies, such as an industrial accident, ensuring they have the liquidity to manage unforeseen expenses without having to secure external financing on short notice.