Determining the Appropriate Target Cash Balance Involves Assessing the Trade-Off

question 12

Multiple Choice

Determining the appropriate target cash balance involves assessing the trade-off between:

• A)income and diversification.
• B)the benefit and cost of liquidity.
• C)of balance sheet strength and transaction needs.
• D)the total cost of handling cash and borrowing cost.
• E)None of the above.

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Definitions:

Barriers To Entry

Are obstacles that make it difficult for new competitors to enter a market, including high startup costs, strict regulations, and established brand loyalty among consumers.

Excess Capacity

Plant resources that are underused when imperfectly competitive firms produce less output than that associated with achieving minimum average total cost.

Product Differentiation

A marketing strategy that businesses use to distinguish their products or services from those of competitors.

Competitive Element

A factor that distinguishes a company in the marketplace, often related to quality, price, or innovation, aiding in achieving a competitive advantage.