Which of the following statements is true regarding cash management?

The statement regarding excess cash being reinvested whenever possible is true because effective cash management involves ensuring that a business optimizes its cash resources. When businesses have excess cash, it is often more beneficial to reinvest that cash into growth opportunities rather than letting it sit idle. This reinvestment could take various forms, such as purchasing new equipment, expanding operations, or investing in marketing efforts, all of which can contribute to increased revenue and profitability.

In contrast, the idea that cash management is only necessary for large businesses overlooks the vital role that cash flow plays in the survival and success of businesses of all sizes. Similarly, the notion that the goal of cash management is to minimize all cash reserves misrepresents the concept; effective cash management aims to ensure that there is sufficient liquidity to meet obligations while also leveraging excess cash for growth. Lastly, the belief that cash flow management is unimportant for small businesses neglects the reality that many small enterprises face tighter cash flow constraints, making it crucial for them to manage cash effectively to maintain operations and ensure long-term viability.