A flexible short-term financial policy will tend to have more of which of the following than a restrictive short-term financial policy will? I. uncollectable accounts receivables
II) work stoppages for lack of raw materials
III) carrying costs
IV) obsolete or out-of-date inventory

Question

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A flexible short-term financial policy will tend to have more uncollectable accounts receivables (I) as it may offer extended credit terms to customers. It may also face work stoppages for lack of raw materials (II) as inventory is not kept at high levels. Furthermore, carrying costs (III) may be higher as there is a need for a larger inventory buffer. There is a possibility of having obsolete or out-of-date inventory (IV) as larger quantities of inventory may need to be held. Therefore, options I, III, and IV are correct.

A Flexible Short-Term Financial Policy Will Tend to Have More