A restrictive short-term ﬁnancial policy, as compared to a more ﬂexible policy, tends to cause a ﬁrm
to lose sales due to a lack of inventory on hand.

Question

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A restrictive short-term financial policy means that the firm may not have enough funds to maintain sufficient inventory, leading to stockouts and potentially losing sales to customers who are unable to purchase the desired product. A more flexible policy may allow for better inventory management and availability, reducing the risk of lost sales.

A Restrictive Short-Term ﬁNancial Policy, as Compared to a More