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How can cash discounts improve cash collections?

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How can cash discounts improve cash collections? What are the ramifications if a firm has too much cash on hand? How can the use of marketable securities be appropriate investments in the management of cash?

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This solution discusses how cash discounts can improve cash collections, the ramifications if a firm has too much cash on hand, and how the use of marketable securities can be appropriate investments in the management of cash. This solution is 182 words.

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Cash discounts will encourage the prompt payment of purchases made on a credit basis from the customers. In addition, the customers will have to compare the cost of foregoing the cash discounts with the financing cost that they can obtain from other sources, which is ...

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