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Cover Enterprises has recently had credit restricted due to late payment to credit suppliers. The firm has difficulty meeting bills on time and has decided
Cover Enterprises has recently had credit restricted due to late payment to credit suppliers. The firm has difficulty meeting bills on time and has decided proper cash management is essential. The following details are provided as it relates to cash: i. The company has decided that that an ideal minimum cash balance of $250,000 is desired. ii. The standard deviation of daily cash balances is $7500 iii. The daily interest rate on marketable securities amounts to 0.015% iv. The transaction cost per trade of marketable securities is $20 Required: 1. Describe THREE additional consequences of poor working capital management. 2. Is there such a thing as holding too much cash? Explain 3. From the information above
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