Identify the Pros and Cons for Being Conservative/aggressive with Respect

question 22

Essay

Identify the pros and cons for being conservative/aggressive with respect to how much cash a firm should have.Also explain why creating liquidity quickly is expensive.

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Definitions:

Fixed Cost

An expense that does not change with an increase or decrease in the number of goods or services produced or sold.

Electricity

A form of energy resulting from the existence of charged particles, used as a power source.

Least-squares Regression

This is a statistical method used to determine a line of best fit by minimizing the sum of squares of the distances of data points from the line.

Warranty Costs

Expenses associated with repairing or replacing products under warranty, recognized as part of product support costs.