When a company faces uncertainty it is common for managers to attempt to build up cash reserves.Which of the following is an important advantage of having large cash balances on hand?

Question

Quizplus · Accepted Answer

Having large cash balances enables a company to continue paying its bills and operating expenses even during a period of low sales or uncertainty in the market. This can help the company remain operational and avoid defaulting on its financial obligations. However, A, C, and D are not accurate advantages of having large cash balances. Cash balances typically do not pay significant interest, they do not increase in value when equity markets go up, and while some shareholders may appreciate cash reserves, others may view it as a sign of poor capital allocation decisions.

When a Company Faces Uncertainty It Is Common for Managers