Why is too much liquidity not a good thing


Please discuss the following topics:

Q1. Why is too much liquidity not a good thing?

Q2. Why is the ROE a more appropriate proxy of wealth maximization for smaller firms rather than for larger ones?

Q3. Why is it not enough for an analyst to look at just the short-term and long-term debt on a firm's balance sheet?

Please use Financial Decision Making for Managers by Parrino & Kidwell

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Finance Basics: Why is too much liquidity not a good thing
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