Question

A restrictive short-term financial policy, as compared to a more flexible policy, tends to increase O...

A restrictive short-term financial policy, as compared to a more flexible policy, tends to increase

O the probability that a firm will face a cash-out situation.

O the sales of a firm due to the firm's credit availability and terms.

O the ability of a firm to charge premium prices.

O accounts receivable.

O sales due the large amount of inventory on hand.

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Answer #1

A.the probability that a firm will face a cash out situation.

Restrictive short term cash policy does not allow the firms to have a high level of current assets which includes cash, accounts receivable etc, so the probability that the firm will face a cash out situation will be high.

Sales will not increase due to short term financial policy (so B and E are false)

Accounts receivable will be low (so D is false).

Firm will not be able to charge premium prices (so C is false).

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