A Flexible Short-Term Financial Policy

Multiple Choice

A flexible short-term financial policy:

A) is associated with firms where the carrying costs are considered to be less than the shortage costs.
B) applies mostly to firms where the shortage costs tend to be less than the carrying costs.
C) applies only to firms that strictly limit their credit sales.
D) tends to decrease the amount of current assets held by a firm.
E) is designed to utilize short-term external financing to fund all of the seasonal increases in current assets.