12. Which of the following would cause a firm to hold more cash today? a. The fi
ID: 2384011 • Letter: 1
Question
12. Which of the following would cause a firm to hold more cash today?
a. The firm must make a known future payment, such as paying interest on a bond next month
b. The firm is going from its peak sales season to its slack season and will start collecting on its receivables
c. The firm is going from its slack season to its peak sales season and is increasing inventory in anticipation.
d. The firm plans to issue long-term securities and has not yet invested the proceeds in operating assets
Explanation / Answer
ANSWER (c) If the firm is going from its slack season to its peak sales season and is increasing inventory in anticipation, then it would hold more cash today.
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