Question

has excess cash of​ $15,000 at the end of the harvesting season. will need this cash in four months for normal operations. Requirements 1. What are some reasons why may choose to invest in debt or equity​ securities? 2. What type of classification would ​'s investment fall within​short-term or​ long-term? Why? Requirement 1. What are some reasons why may choose to invest in debt or equity​ securities?

Answer 1

Answer:

1)

Some of the major reasons why Garden Haven might to choose to either  invest in debt or equity securities are as follows;

• They want to generate earnings. It is better to earn money from excess cash than keep it idle.
• They invest in debt or securities because they provide liquidity. Investments in debt or securities can be sold through exchange the day decision is taken to see and convert it cash .
• To meet cyclical cash needs.

• They may have policies as regard to quantum of cash that can be kept .

2)

In terms of classification, Garden Haven's investment falls in short term investments.

Investments made for a period less than a year are classified as short term investments. Investments made for longer than one year are classified as long term investments. Since Garden Haven is making this investment for four months, this is be classified as short term investment.