The variability of a firm's operating cash flows is probably reduced by international diversification of its production, sourcing, and sales because exchange rate changes under disequilibrium conditions are likely to increase the firm's competitiveness in some markets while reducing it in others.

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By diversifying its production, sourcing, and sales across multiple countries, a firm is less reliant on the performance of any one particular market or currency. This can help mitigate the impact of exchange rate fluctuations under disequilibrium conditions, which could make the firm more competitive in some markets while less competitive in others. Therefore, international diversification can help reduce the variability of a firm's operating cash flows.

The Variability of a Firm's Operating Cash Flows Is Probably