Asked by Jibreel Ahmad on May 01, 2024
Verified
A restrictive short-term financial policy, as compared to a more flexible policy, tends to increase the probability that a firm will face a cash-out situation.
Restrictive Policy
A policy designed to limit or restrict certain actions, often used to control spending or investments.
Cash-Out Situation
A scenario where an individual withdraws funds from an investment or refinances a property to access the equity built up, often resulting in immediate liquid cash.
- Detect the effects of temporal financial strategies on the liquidity and functioning of a firm.
- Decode the nuances between restrictive and flexible short-term fiscal policies.
- Acquire knowledge on how company strategies influence sales performance, cash flow conditions, and inventory holdings.
Verified Answer
MR
Melissa RamosMay 05, 2024
Final Answer :
True
Explanation :
A restrictive short-term financial policy typically involves maintaining lower levels of current assets relative to liabilities, which can lead to less liquidity and a higher risk of facing a cash-out situation due to insufficient funds to cover short-term obligations.
Learning Objectives
- Detect the effects of temporal financial strategies on the liquidity and functioning of a firm.
- Decode the nuances between restrictive and flexible short-term fiscal policies.
- Acquire knowledge on how company strategies influence sales performance, cash flow conditions, and inventory holdings.
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