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Finance

Which of the following statements is CORRECT?

A The best way to judge the effectiveness of a firm's cash management procedures is to look at the ratio of its cash balances to its sales. The higher this ratio, the more effective the firm's cash management procedures are.
B A good lock box system will reduce the likelihood that a firm's cash will be stolen, and thus the better the lock box system, the higher the firm's cash balances are likely to be.
C A good cash budgeting system will improve the ability of a firm to forecast its cash requirements, and this will enable it to carry larger cash balances.
D If a firm can set up its billing and payments procedures so as to synchronize receipts and payments, this will enable it to operate with lower cash balances, which is good.
E If Firm A's sales tend to fluctuate violently and unpredictably, whereas Firm B's sales are stable and predictable, then Firm B should carry larger cash balances because they are less likely to be lost during a downturn.

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Which of the following statements is CORRECT?

A The best way to judge the effectiveness of a firm's cash management procedures is to look at the ratio of its cash balances to its sales. The higher this ratio, the more effective the firm's cash management ...

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This solution is comprised of a detailed explanation to answer which of the following statements is CORRECT.

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