What sort of bad decisions do excessive cash balances lead managers to make?
A)Managers may embezzle excess cash balances.
B)Managers may lose sight of cost containment and spend cash on unrelated businesses.
C)Managers may invest excessive cash balances so that the liquidity of those funds is lost.
D)Managers may contend that the excessive cash balances are actually profits that they created.

Question

Quizplus · Accepted Answer

When a company has excessive cash on hand, managers may be tempted to spend that cash on unrelated businesses or ventures that do not align with the company's core strategies or goals. This can lead to poor investments and a waste of company resources. Additionally, managers may lose sight of cost containment and overspend on expenses that do not contribute to the company's overall profitability.

What Sort of Bad Decisions Do Excessive Cash Balances Lead