Chapter 11 Cash Management

Question 1

What are the short-term and long-term purposes of cash management?

Answer 1

short term: cover shortages so bills and debts can be paid on time
long-term: take advantage of the surpluses

Question 2

What is the purpose of a cash budget?

Answer 2

control and plan cash receipts and disbursement during the cycle

Question 3

what to do in case of surplus or shortage

Answer 3

if you have a surplus, invest in high-interest, low-risk, short-term marketable securities
If you have a shortage, take a short-term investor loan