Which One of the Following Statements Is Correct Concerning the Short-Term

question 23

Multiple Choice

Which one of the following statements is correct concerning the short-term financial policy of a firm?

• A) A flexible short-term policy maintains a relatively low ratio of current assets to sales.
• B) A restrictive short-term policy calls for less short-term debt and more long-term debt.
• C) A flexible short-term policy closely resembles an all-cash-sales policy.
• D) A flexible short-term policy leads to a high level of net working capital.
• E) A restrictive short-term policy provides more liquidity than does a flexible policy.

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Definitions:

Mechanistic Organization

A form of organizational structure characterized by rigid hierarchies, strict rules, and a high degree of formalization.

Rules And Procedures

Rules and procedures are formal guidelines within an organization that outline expected behaviors, processes, and standards for conducting activities.

Closely Supervised

A management approach where employees or team members are monitored and directed very closely by their superiors.

Organization Structure

The system of tasks, workflows, reporting relationships, and communication channels that link the diverse parts of an organization.