Question

What costs would a firm following a flexible current asset management strategy consider, and why?

Answer 1

Solution. A flexible current asset management theory encompasses managing high cash balances on hand compared to sales in order to ignore future threats or unwanted shortages to meet demand in future by a firm. A firm following a flexible current asset management strategy focuses its costs or involves major costs on maintaining high inventories in warehouses, costs involved in keeping and retaining communication with customers such as term credits, opportunity costs involved in maintaining high current assets through a selected means by a firm to meet targets set.