Which One of the Following Statements Is Correct

question 84

Multiple Choice

Which one of the following statements is correct?

• A)A firm with a restrictive financing policy secures sufficient long-term financing to fund all its assets.
• B)A firm with a flexible financing policy frequently invests in marketable securities.
• C)A firm with a flexible financing policy tends to use short-term financing on a frequent basis.
• D)Firms tend to avoid short-term financing under both restrictive and flexible financing policies.
• E)Firms with seasonal sales select flexible financing policies.

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Definitions:

Control

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Significant Influence

The power to participate in the financial and operating policy decisions of an investee without having control or joint control over those policies.

Presumptive Test

A preliminary test based on presumptions established by criteria or evidence that suggests or implies a certain condition or outcome.

Voting Power

The right of shareholders to vote on corporate matters, usually proportional to the number of shares they hold.