The firm's ability to use its financial resources to adapt to change is the definition of
A)Liquidity
B)Solvency
C)Financial flexibility
D)Working capital

Question

Quizplus · Accepted Answer

Financial flexibility refers to a firm's ability to use its financial resources to adapt to change. It is the ability to change its operations or investment plans quickly in response to unexpected events or new opportunities. Financial flexibility is important for firms to remain competitive and to survive in uncertain economic conditions. Liquidity refers to a firm's ability to meet its short-term obligations, solvency refers to its ability to meet its long-term obligations, and working capital refers to the difference between current assets and current liabilities. While these concepts are related to financial flexibility, they do not directly address a firm's ability to adapt to change.

The Firm's Ability to Use Its Financial Resources to Adapt