While the strategic marketing and production adjustments occur over the long run,financial management may finance the firm's operations such that shortfalls in cash flows during the adjustments are offset by a reduction in __________ expenses.

Question

Quizplus · Accepted Answer

Since the adjustments are occurring over a long run, it is likely that the firm will experience shortfalls in cash flows during this time. To offset these shortfalls, financial management may finance the firm's operations by reducing debt-servicing expenses. This means that the firm may decrease its debt payments or renegotiate its debt terms to free up more cash for operations. This can help the firm weather the adjustments without risking insolvency. Therefore, the best choice is C) debt-servicing.

While the Strategic Marketing and Production Adjustments Occur Over the Long