One of the most reliable methods of determining an adequate minimum cash balance is using past experience.

Question

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Past experience can provide valuable insight into the minimum cash balance needed to meet financial obligations and avoid cash shortages. By analyzing trends in cash flow and identifying any seasonal fluctuations or unexpected expenses, a company can establish a reasonable minimum cash balance that takes into account its unique circumstances and helps mitigate financial risk. However, it is important to also consider current economic conditions and future growth plans when determining a minimum cash balance.

One of the Most Reliable Methods of Determining an Adequate