Which One of These Statements Is Correct

question 45

Multiple Choice

Which one of these statements is correct?

• A)A firm might be able to charge higher prices if it switches from a flexible to a restrictive short-term financial policy.
• B)If a firm adopts a restrictive short-term financial policy,its current assets will be greater than if it adopts a flexible policy.
• C)If a firm switches from a flexible short-term financial policy to a restrictive policy,it is likely to see an increase in its uncollectible accounts receivable.
• D)If a firm switches from a restrictive short-term financial policy to a flexible policy,its operating cycle will most likely decrease.
• E)Future cash flows are expected to be higher if a firm adopts a flexible,rather than a restrictive,short-term financial policy.

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Definitions:

Lump Sum

A single payment made at a particular time, as opposed to a series of smaller payments or installments.

Annual Payments

Annual payments are payments made once a year for various financial commitments such as loans, insurance policies, or rent, providing a means to manage large payment obligations over time.

Interest Rate

The expense a borrower is obliged to pay to a lender, formulated as a percentage of the principal, for the service of borrowing assets.

Present Value

The present amount of a future sum of money or sequence of cash flows, discounted by a chosen rate of return.