Restrictive short-term financial policies regarding current asset management include three basic actions. List and briefly describe each action.

1.a flexible short term financing policy maintains a high ratio of current assets to sales .the policy includes limited use of short term debt and heavy reliance on lonng term

2.a restrictive short term financing policy entailes as a low ratio of current assests to sales.this policy relies upon the use of short term liabilites

3.if carrying costs are low and or shortage costs are high flexible financing policy is optimal .

if carrying costs are high or shortage costs are low a resrtictive short term financing policy is optimsal.

SGORTAGE COSTS IS DEFINED AS:these are the costs which are given by or incurred by a fir or any organisation ,when an investment in current assets are low.

THESE ARE TWO TYPES 1.TRADING ORDER COSTS

2.COSTS RELATED TO SAFETY RESERVES .