Which one of these is indicative of a short-term restrictive financial policy?
A) Purchasing inventory on an as-needed basis
B) Granting credit to all customers
C) Investing heavily in marketable securities
D) Maintaining a large accounts receivable balance
E) Keeping inventory levels high

Question

Quizplus · Accepted Answer

Purchasing inventory on an as-needed basis indicates a short-term restrictive financial policy since the company is only buying the necessary amount of inventory, reducing the amount of cash tied up in inventory and preserving cash for other urgent needs. It shows that the company is looking to conserve cash and manage its short-term liquidity better. The other options such as granting credit to all customers, investing heavily in marketable securities, maintaining a large accounts receivable balance, and keeping inventory levels high do not necessarily reflect a short-term restrictive financial policy.

Which One of These Is Indicative of a Short-Term Restrictive