If revenues can be forecast to fall within a tight range of outcomes, then the ratio of cash and near-cash to total assets will be greater for the firm than if the prospective cash inflows might be expected to vary over a wide range.

Question

Quizplus · Accepted Answer

If revenues are forecast to fall within a tight range, the firm may not need to hold as much cash or near-cash assets as a buffer against uncertainty, leading to a lower ratio compared to a scenario with more variable cash inflows.

If Revenues Can Be Forecast to Fall Within a Tight