The following are indicators that the firm has a cash surplus:.
I.Free cash flow is reliably positive.
II.The firm has a low debt ratio compared to similar firms.
III.The firm has sufficient debt capacity to cover unexpected opportunities or setbacks.

Question

Quizplus · Accepted Answer

All three indicators suggest that the firm has a cash surplus. 
I. Positive free cash flow means that the firm has cash left over after it has covered its capital expenditures, which is a sign of financial strength. 
II. A low debt ratio means that the firm has less financial obligations to meet, which indicates that it has more cash available. 
III. Having sufficient debt capacity means that the firm can take advantage of unexpected opportunities without having to resort to expensive financing options, which is a sign of financial stability.

The Following Are Indicators That the Firm Has a Cash