A Flexible Short-Term Financial Policy

Multiple Choice

A flexible short-term financial policy:

A) increases the likelihood that a firm will face financial distress.
B) incurs an opportunity cost due to the rate of return that applies to short-term assets.
C) advocates a smaller investment in net working capital than a restrictive policy does.
D) increases the probability that a firm will earn high returns on all of its assets.
E) utilizes short-term financing to fund all of the firm's assets.