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The cash management policy is to invest surplus funds in marketable securities.

The clinic has a cash surplus of $612,498 at the end of June. A reasonable investment policy that would provide liquidity and safety yet offer the clinic a reasonable return on its investment will be these types of investments: Treasury bills, certificates of deposits, bonds, and money market account. Marketable securities have maturity date or time that are short term (less than a year) and is a more secure way to preserve cash for unanticipated events; Corporate earnings retention is a case of optimization under conditions of uncertainty (6). (100 Words) The suggestions made for this clinics cash management policy to invest surplus funds in marketable securities can also be duplicated in a business whose cash balance were projected to be in the millions. The cash balances are significant different between the two, however, the objectives are still the same, and that is to have an investment vehicle that can seize certain opportunities in the financial market with minimal risk, offer liquidity to overcome unexpected cost or possible shortage of bank credit, and provide return of investments that will be more than maintaining cash on hand. (95 Words)