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Why important for firms to maintain a minimum cash balance

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Reference no: EM132962802

Problem A. The Jen's Boutique currently has a 25 day cash cycle. Assume the firm changes its operations such that it increases its receivables period by 3 days, decreases its inventory period by 2 days, and decreases its payables period by 5 days. What will the length of the cash cycle be after these changes?

Problem B. Why is it important for firms to maintain a minimum cash balance when the cost of doing so is greater than the return generated by the funds held in reserve?

Reference no: EM132962802

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