How is cash drag and opportunity cost related

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Question - Company shareholders and Stocks - Comparative analysis of the income statement is required to check the trend in sales, gross profit, and inventory. If all these ratios reflect a positive trend, then an increase in cash position reflects a sound position of the company. The only increasing cash position can be considered a sound position for the company if the ratios are showing a positive trend and the company has a plan in place to migrate the negative effect of dissatisfied clients. In this situation, shareholders do not need to be concerned since the funds will be used to improve the company's financial performance in the future.

A strong cash position also means that the funds are not utilized effectively.

A good cash position means that the liquidity will help deal with uncertainties and losses.

How is cash drag and opportunity cost related to too much cash on hand? Include references.

Reference no: EM132964103

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