Compared to other current asset investment policies, a restricted current asset investment policy prescribes that a firm should hold maximum levels of safety stocks for cash and inventories and should have a liberal credit policy.

Question

Answer the following statement true (T) or false (F)

Answer 1

False

With a restricted current asset investment policy, a firm will hold minimal levels of safety stocks for cash and inventories, and it will have a tight credit policy even though such a policy would mean running the risk of losing sales. See 15-1: Alternative Current Asset Investment Policies