A flexible short-term financial policy:
A) maximizes cashouts.
B) increases shortage costs due to frequent cash-outs.
C) tends to decrease sales as compared to a restrictive policy.
D) incurs more carrying costs than a restrictive policy.
E) requires only a minimum investment in current assets.

Question

Quizplus · Accepted Answer

A flexible short-term financial policy typically involves maintaining higher levels of current assets to meet unexpected needs, which leads to higher carrying costs compared to a restrictive policy that aims to minimize holdings in current assets.

A Flexible Short-Term Financial Policy