Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash. Introduction: Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Question

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Answer 1

Question

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.

Conclusion

It is possible for the firm to have too much cash, where the additional cost is the opportunity cost.

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Pam and Jim are saving money for their two children who they plan to send to university.The eldest child will enter university in 5 years while the younger will enter in 7 years. Each child is expected spend four years at university. University fees are currently R20 000 per year and are expected to grow at 5% per year. These fees are paid at the beginning of each year.Pam and Jim currently have R40 000 in their savings and their plan is to save a fixed amount each year for the next 5 years. The first deposit taking place at the end of the current year and the last deposit at the date the first university fees are paid.Pam and Jim expect to earn 10% per year on their investments.What amount should they invest each year to meet the cost of their children’s university fees?

Answer 2

Question

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.

Conclusion

It is possible for the firm to have too much cash, where the additional cost is the opportunity cost.

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Answer 3

Question

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.

Conclusion

It is possible for the firm to have too much cash, where the additional cost is the opportunity cost.

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Answer 4

Question

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.

Conclusion

It is possible for the firm to have too much cash, where the additional cost is the opportunity cost.

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Answer 5

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.

Conclusion

It is possible for the firm to have too much cash, where the additional cost is the opportunity cost.

Answer 6

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.

Conclusion

It is possible for the firm to have too much cash, where the additional cost is the opportunity cost.

Answer 7

Chapter 17, Problem 1CTCR

Summary Introduction

To discuss: Whether it is possible for a firm to have too much cash and the reason for the shareholders concern towards gathering large amounts of cash.

Introduction:

Cash management indicates a broad area of finance that involves the collection, handling, and cash usage. It includes evaluating the cash flow, market liquidity, and investments.

Answer 8

Expert Solution & Answer

Explanation of Solution

If a firm has too much cash than it requires for the operations and planned expenses, then the excess cash have an opportunity cost. If a firm gathers large amounts of cash, it can be invested potentially in many possible ways.

Moreover, the excess cash on hand will lead to poorly thought-out decision of management. The thought is that maintaining the low level of cash pushes the management to pay careful attention to the capital spending and cash flow.