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Sophia's co-op placement is with a Saskatchewan-based agricultural consulting company, in the accounting department. The job has been interesting and has kept Sophia quite busy.

Sophia's co-op placement is with a Saskatchewan-based agricultural consulting company, in the accounting department. The job has been interesting and has kept Sophia quite busy. She thought she was really starting to understand how things worked, but recently a senior finance department staff member commented that "It is quite important for our company to maintain a minimum cash balance of approximately $250,000 at all times. Often the cost of holding this much cash is greater than the return generated by the funds. Still, we have to do this." Sophia was puzzled by the comment. How would you explain it?

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