Asked by Christine Dawson on Apr 26, 2024
Verified
Paulette's Wholesalers has adopted a flexible short-term financial policy. Explain how this policy affects the current assets of the firm.
Flexible Short-term Financial Policy
A financial strategy that emphasizes maintaining liquidity and flexibility in meeting short-term obligations without committing to long-term financial decisions.
- Assess the advantages and disadvantages of different short-term financial approaches (flexible vs. restrictive).
Verified Answer
DS
Dhannya SojanApr 30, 2024
Final Answer :
A flexible short-term financial policy supports large cash and cash equivalent balances, a high level of inventory, and a high level of accounts receivable. Thus, the current assets of a firm with a flexible policy will be greater than that of a comparable firm with a restrictive policy.
Learning Objectives
- Assess the advantages and disadvantages of different short-term financial approaches (flexible vs. restrictive).
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