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Excessive assets
How Can Excessive Current Assets Impact a Company's Performance?
December 23, 2023
What are the risks associated with having excessive current assets?
Excessive current assets pose risks like reduced liquidity and decreased profitability. Idle cash tied up in excess assets limits investment opportunities, affecting returns. Holding too much inventory leads to storage costs, obsolescence, and capital tied up, impacting cash flow. Moreover, high accounts receivable indicate credit risks and potential bad debts, impacting overall financial stability.
Tags : Excessive Assets , Liquidity Risk , Financial Performance