Which one of the following actions is indicative of a restrictive short-term financial policy?

Question

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Minimising the cash balances held by the firm is indicative of a restrictive short-term financial policy as it limits the amount of cash available for immediate needs and signifies a focus on managing cash flow tightly. A more relaxed short-term financial policy might involve maintaining higher cash balances to cover unexpected expenses or to take advantage of investment opportunities. The other options - expanding inventory items carried, granting increasing amounts of credit, investing in marketable securities, or increasing the firm's investment in current accounts - would be more indicative of a more loose or aggressive short-term financial policy.

Which One of the Following Actions Is Indicative of a Restrictive