A survey of CFOs indicated that
A)financial flexibility is only a concern for managers of smaller firms; larger, publicly-traded firms are easily able to raise funds as necessary.
B)having a low interest coverage ratio is very important to them.
C)they pay close attention to their bond ratings and interest coverage ratios.
D)targeting an optimal long-term capital structure is more important to them than working capital management issues.

Question

Quizplus · Accepted Answer

The survey indicates that CFOs pay close attention to their bond ratings and interest coverage ratios, indicating that financial stability and the ability to raise funds are important factors for them to manage. Option A is not supported by the survey as it does not indicate that financial flexibility is only a concern for managers of smaller firms. Option B is specific to interest coverage ratio only and does not encompass other financial factors. Option D indicates a preference for long-term capital structure, but the survey does not provide evidence to suggest that it is more important than working capital management issues. The survey indicates that CFOs pay close attention to their bond ratings and interest coverage ratios, which are both related to the company's ability to raise funds and manage financial flexibility. This suggests that financial flexibility is a concern for all firms, regardless of size or public status, and that CFOs prioritize maintaining a stable and healthy financial position through these key metrics. The other options are either incorrect (A) or less relevant to the survey findings (B, D).

A Survey of CFOs Indicated That