A firm with highly liquid assets plus unused debt capacity is said to have ____.
A) arbitrage structural capacity
B) the optimal capital structure
C) financial slack
D) optimal financial structure

Question

Quizplus · Accepted Answer

Financial slack refers to the excess liquidity or unused debt capacity of a company, which can be used to take advantage of investment opportunities or fund future projects. It is an important aspect of financial management as it provides a cushion for unexpected events and allows for flexibility in decision making. Therefore, a firm with highly liquid assets plus unused debt capacity is said to have financial slack.

A Firm with Highly Liquid Assets Plus Unused Debt Capacity