Operating and financial flexibility refers to a company's ability to
A)adjust to unexpected downturns in the economic environment in which it operates or to take advantage of profitable investment opportunities as they arise.
B)generate sufficient cash flows to maintain its productive capacity and still meet interest and principal payments on long-term debt.
C)readily convert assets to cash relative to how soon liabilities will have to paid in cash.
D)increase sales.

Question

Quizplus · Accepted Answer

Operating and financial flexibility refers to a company's ability to adjust to unexpected downturns in the economic environment in which it operates or to take advantage of profitable investment opportunities as they arise. This means that the company can respond quickly and effectively to changes in the market and adapt its operations and financing accordingly. The other options (B, C, D) touch on other important aspects of financial management, but they do not specifically address the idea of flexibility in the face of changing circumstances.

Operating and Financial Flexibility Refers to a Company's Ability to