Cash is often referred to as a "non-earning" asset.Thus, one goal of cash management is to minimize the amount of cash necessary for conducting a firm's normal business activities.

Question

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Cash is not capable of generating profit or income on its own and hence it is referred to as a non-earning asset. Therefore, one of the goals of cash management is to reduce the amount of cash held by the firm to the minimum necessary level.

Cash Is Often Referred to as a "Non-Earning" Asset