True or False QuestionA firm's cash must be sufficiently available to meet the company’s obligations.True false question.TrueFalse

Answer: True

The statement is indeed true. A firm's cash must be sufficiently available to meet its obligations, which include both short-term liabilities like payroll, rent, and supplier payments, as well as long-term debts. Cash availability is crucial for maintaining liquidity, ensuring that the company can operate smoothly without facing solvency issues. If a firm does not hold enough cash or liquid assets, it risks defaulting on its obligations, which can lead to severe financial repercussions, including damage to its credit rating, operational disruptions, or even bankruptcy. Therefore, effective cash management and maintaining an adequate cash reserve is essential for any business to thrive in a competitive environment.