HELP! What are some reasons a company might not have enough cash reserves?

If you don't have cash in hand, you may be forced to take on additional loans or make late payments. This can lead to late payment fees on utilities or debts. Additionally, your late payments negatively affect your business' credit rating and impact your ability to get credit account privileges and loans in the future.

According to Corporate Finance Institute, the cost of capital is the minimum rate of return that a business must generate before generating value to shareholders. The excess cash might also make the management team complacent, which increases the risk of damaging the business value.

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