If credit restrictions for accounts receivable are increased, then it would move a ﬁrm toward a
ﬂexible short-term ﬁnancial policy.

Question

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If credit restrictions for accounts receivable are increased, it would move a firm toward a restrictive short-term financial policy. This is because the firm would be less willing to extend credit to its customers, which would reduce the amount of accounts receivable and, therefore, the amount of short-term debt that the firm needs to finance its operations.

If Credit Restrictions for Accounts Receivable Are Increased, Then It