Minimal cash balances are associated with a restrictive short-term financial policy.

Minimal Cash Balances

Minimal Cash Balances represent the smallest amount of cash that a business needs to keep on hand to meet its immediate payment obligations and avoid liquidity issues.

Restrictive Policy

A policy designed to limit or control certain actions, often used in the context of financial lending where certain covenants restrict borrower behavior.

Understand the consequences of immediate financial policies on an organization's operational effectiveness and liquidity.
Discern between tight and adaptable short-term financial policies.
Master the fundamentals of short-term financing and the application of marketable securities.

Verified Answer

Aleesha ArmstrongJul 19, 2024

Final Answer :

True

Explanation :

Minimal cash balances are a characteristic of a restrictive short-term financial policy, which aims to minimize holding costs and invest in fewer short-term assets, thus keeping cash balances low.

Learning Objectives

Understand the consequences of immediate financial policies on an organization's operational effectiveness and liquidity.
Discern between tight and adaptable short-term financial policies.
Master the fundamentals of short-term financing and the application of marketable securities.

Minimal cash balances are associated with a restrictive short-term financial policy.

Definitions

Learning Objectives

Learning Objectives

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