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1419 what are the three main advantages of cash

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Unformatted text preview: Journal, May 2, 2002, pp. C9, C10, and C14. bYields — 626 PART 5 Short-Term Financial Decisions Review Questions 14–17 What is float and what are its three components? 14–18 What are the firm’s objectives with regard to collection float and to payment float? 14–19 What are the three main advantages of cash concentration? 14–20 What are three mechanisms of cash concentration? What is the objective of using a zero-balance account (ZBA) in a cash concentration system? 14–21 What two characteristics make a security marketable? Why are the yields on nongovernment marketable securities generally higher than the yields on government issues with similar maturities? S U M M A RY FOCUS ON VALUE It is important for a firm to maintain a reasonable level of net working capital. To do this, it must balance the high profit and high risk associated with low levels of current assets and high levels of current liabilities against the low profit and low risk that result from high levels of current assets and low levels of current liabilities. A strategy that achieves a reasonable balance between profits and liquidity (the risk of technic...
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