Most conservative kind of working capital financing plan

Question

Which is the most conservative kind of working capital financing plan a company can implement? What are the main reasons that firms hold cash?

Answer 1

An all equity capital structure would be the most conservative type of working capital financing plan. When too much long-term financing used, the financing plan will be more conservative. Equity is considered as permanent financing.
Companies hold cash to complete important payments, to grab good opportunities as they arise and to cover unexpected emergencies.