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:

Sales And Profitability

measures of the effectiveness of a company's operations; where sales refer to the revenue from goods or services sold, and profitability is the extent to which this revenue exceeds the costs incurred.

Historical Approach

A method of research that examines past events and developments to understand the present and anticipate future trends.

Desired Performance

A target level of performance set by an individual or organization to achieve specific goals.

Actual Performance

The real, observed outcomes of a person's work or the execution of a specific task.