A ﬁrm which employs a ﬂexible short-term ﬁnancial policy will have a relatively:
A) Low ratio of current assets to sales.
B) Low amount of marketable securities.
C) Low amount of short-term debt relative to long-term debt.
D) High amount of short-term debt.
E) High amount of accounts payable.

Question

Quizplus · Accepted Answer

A firm with a flexible short-term financial policy will have a lower amount of short-term debt relative to long-term debt. This is because the policy allows the firm to easily adjust its short-term financing needs through the use of long-term debt instead of relying solely on short-term debt. This provides more stability in the firm's financial structure and reduces the risk of any short-term financial difficulties.

A ﬁRm Which Employs a ﬂExible Short-Term ﬁNancial Policy Will