Firms Would Need to Hold Zero Cash When Transactions Related

question 29

Multiple Choice

Firms would need to hold zero cash when transactions related needs are:

• A) greater than cash inflows.
• B) less than cash inflows.
• C) not perfectly synchronized with cash inflows.
• D) perfectly synchronized with cash inflows.
• E) None of these.

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Definitions:

Liabilities

Financial obligations or debts that a business owes to others, which must be settled over time through the transfer of economic benefits.

Dividends

Portions of a company's earnings that are distributed to shareholders, typically in the form of cash or additional shares.

Insurance Expense

An accounting term that refers to the cost associated with purchasing insurance policies to protect against various risks.

Accounts Receivable

The money owed to a company by its customers for goods or services delivered but not yet paid for.