All categories

3 years ago

Which of the following BEST describes a company's proper liquidity management?

Business

2 answers:

777dan777 [17]3 years ago

7 0

Answer:

The correct answer is letter "A": Liquidity management is a balancing act; managers try to find liquidity levels that are neither too high not too low.

Explanation:

Liquidity management implies companies lowering their risks. This is achieved by having enough cash to leverage the debts incurred because of the business operations. Especially when it comes to banks, liquidity implies the financial institution possessing enough collateral to offset potential risks of not being returned money loaned.

Naddika [18.5K]3 years ago

4 0

Answer:

A. Liquidity management is a balancing act, managers try to find liquidity levels that are neither too high not too low.

Explanation:

Maintaining proper liquidity is an important financial objective of management. Proper liquidity management demands that an entity should be able to meet his short term financial obligation and making sure that liquid assets of the entity are not idle. In order to achieve this, the best way to go is to maintain a level that is neither too high and not too low. Not too high means the entity is not holding too much cash or liquid assets than it currently need to meet its short term financial obligation.

For example, not keeping too much cash in current account but investing them in interest-earning investment assets.

Not too low means the cash or liquid assets held by an entity should not less than the amount needed to meet its short term financial obligation. For example, making sure that the entity has enough cash or readily convertible liquid assets that can be used to pay vendors, rent, interest and meet other short term financial obligation.

Option B is false because keeping too much does not help to maximize short term earnings which is a feature of proper liquidity management. Option C is wrong because there is no guideline to support that deferring coupon payment won`t attract payment and this does not connote proper liquidity management.

Option D is obviously false and does not describe proper liquidity management.

You might be interested in

While promoting a new line of kayaks, a company decided to be traditional. It distributed folders to journalists, which containe

Katarina [22]

Answer:

Press Kits

Explanation:

Based on the information provided within the question these folders are called Press Kits, or in a business context known as Media Kits. Like mentioned in the question these provide the journalists or media outlets all the information that they may need to know on the product, service, or company, in order for them to discuss this or promote the material that is within the brochures.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

3 0

3 years ago

Dell Computer uses recycled and recyclable materials in its product and packaging design in an effort to minimize damage to the

eduard

Answer: Sustainability

Explanation: Sustainability simply means continual existence regardless of domain or pillar. It explains the maintenance of economic, social and environmental resources to meet the demand and needs of the present industry or generation without jeopardizing or compromising the needs of future generation. The concept of sustainability looks beyond the present, it focuses on harmonizing the needs of present and future generation by encouraging decisions and policies that focuses beyond the present, rather considering the effects of present policies in decades to come. Common sustainability goals include reduction of carbon emission, shift to the use of renewable energy resources such as wind, hydro and solar, All in a bid to maintain a healthy ecosystem for present and more importantly future generation.

5 0

3 years ago

A wealthy person's best option for helping out a charitable cause is to donate cash.

vagabundo [1.1K]

The answer for the question is true

4 0

3 years ago

Read 2 more answers

For a capital intensive, automated company the break-even point will tend to be higher and the margin of safety will be lower th

DedPeter [7]

Answer:

Very Very True

Explanation:

Your Welcome!

3 0

4 years ago

EarthWear's income before taxes is $36 million (rounded). Assume that the auditors have decided that 5 percent of this benchmark

ratelena [41]

Answer: $900000

Explanation:

The second step in any substantive analytical procedures decision process is to determine or calculate a tolerable difference. Since the expectation developed by the auditor will slightly be identical to the client's recorded amount, the auditor must make a decision about the amount of difference that would require further investigation. The size of the tolerable difference relies on the significance of the account, the desired degree of reliance on the analytical procedure, the level of disaggregation in the amount being tested, and the precision of the expectation.

In the above statement,

The tolerable misstatement= 50%

Income before taxes= $36million

5% benchmark appropriate for planning materiality.

Therefore,

The tolerable difference for the analytical procedure:

$36million × 0.05 × 0.5

= $900000

3 0

3 years ago