The Lumber Mart recently replaced its management team.As a result,the firm is implementing a restrictive short-term policy in place of the flexible policy under which the firm had been operating.Which of the following should the employees expect as a result of this policy change?
I.reduction in sales due to stock outs
II.greater inventory selection
III.decreased sales due to the new accounts receivable credit policy
IV.decreased investment in marketable securities
A)I and II only
B)II and IV only
C)I, II, and IV only
D)I, III, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

A restrictive short-term policy typically means tighter control over inventory and credit policies, leading to potential stock outs (I), stricter credit policies reducing sales (III), and less cash tied up in inventory or receivables, thus possibly more investment in marketable securities (IV). Greater inventory selection (II) would be more associated with a flexible policy.

The Lumber Mart Recently Replaced Its Management Team