Question

Creative Corporation is a manufacturer of children's toys. Creative has significant debt outstanding that has been used to purchase equipment and inventory used in its manufacturing process. Creative has positive cash from operating activities during the holiday season (November and December), but negative cash from operating activities during the months preceding the holiday season. Meanwhile, Technology Inc. is a mature, successful software development company with no debt outstanding and very few non-current assets. Which company requires a higher amount of cash on hand? Discuss, in general terms, how much cash each firm should have on hand for effective cash management.


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  • CreatedSeptember 18, 2015
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