Investing Idle Cash
Due to the seasonal and/or cyclical nature of business, or in order to be able to quickly deploy large amounts of cash, firms can end up with large cash surpluses on their accounts. Cash idly sitting in the bank account does not generate interest, thus carrying opportunity cost.
Should be invested in the short-term money markets,where it will be earning interest while being easily accessible (liquid) at the same time.
firms should consider such factors as maturity, risk of default, liquidity, and possible tax advantages.