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IV.obsolete or out-of-date inventory

Question

Quizplus · Accepted Answer

A flexible short-term financial policy will have a higher risk of uncollectable accounts receivables and obsolete or out-of-date inventory because it allows for more lenient credit terms and a larger inventory stock. However, it will have lower carrying costs due to the ability to quickly adjust inventory levels and will likely avoid work stoppages for lack of raw materials by maintaining a higher inventory. Therefore, I, III, and IV are more likely to be present with a flexible short-term financial policy than a restrictive policy.

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