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what is meant by financial flexibility and why is it important

by Savion Williamson Published 3 years ago Updated 2 years ago
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Financial flexibility is the ability to react and adapt to changing financial conditions. The current financial stress in agriculture has highlighted the importance of a farm maintaining financial flexibility. Financial flexibility is difficult to define with one financial ratio or measure.

Financial flexibility is defined by Gamba and Triantis (Journal of Finance 2008) as “the ability of a firm to access and restructure its financing at a low cost.” Flexibility lessens the underinvestment problems if access to capital is limited and helps to avoid financial distress.

Full Answer

What factors can increase flexibility?

What Affects Flexibility and Joint Mobility

  • Tissue Bulk. Excessive muscle or adipose tissue bulk impedes normal joint range of motion. ...
  • Quality of Movement. Although a comprehensive strength training program has a positive effect on flexibility gains, heavy strength training through a limited range of motion during an exercise can decrease ...
  • Activity Level. ...
  • Injury or Dysfunction. ...
  • Age & Sex. ...

What does financial flexibility mean?

preserve financial flexibility.1 Financial flexibility represents the ability of a firm to access and restructure its financing at a low cost. Financially flexible firms are able to avoid financial distress in the face of negative shocks, and to readily fund investment when profitable opportunities arise.

What can be done to improve flexibility?

To get the most out of your flexibility training, keep these factors in mind:

  • Aim for 3 days a week of flexibility training to start. A 10- to 15-minute session that combines breath work, static stretching, and dynamic stretching will be efficient and manageable.
  • Hold or perform each stretch for 15 to 30 seconds. Relax and repeat.
  • Perform dynamic stretches before strength training and cool down with static stretches after. ...

What are types of flexibility?

What are types of flexibility exercises?

  • Ballistic Stretching.
  • Dynamic Stretching.
  • Active Stretching.
  • Passive Stretching.
  • Static Stretching.
  • Isometric Stretching.
  • PNF Stretching.

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How do you achieve financial flexibility?

Being financially flexible means doing more with our money by following a monthly budget, being wise shoppers and taking advantage of employer-offered financial wellness tools and voluntary benefits such as financial counseling, student loan refinancing programs and employee purchase programs.

What is financial flexibility in investopedia?

Financial flexibility is the ability to react and adapt to changing financial conditions. The current financial stress in agriculture has highlighted the importance of a farm maintaining financial flexibility. Financial flexibility is difficult to define with one financial ratio or measure.

Why financial flexibility is important?

Being financially flexible gives a business the luxury of being able to withstand the internal budgetary pressures that might arise from unexpected situations, without impacting its bottom line.

What is financial flexibility and how can a company measure financial flexibility?

Financial flexibility is the ability of a firm to adapt to change. The current ratio and the acid test ratio can be used to assess short-term financial flexibility. To assess long-term financial flexibility, financial statement users use the Debt Ratio to evaluate the firm's debt levels.

What is the financial flexibility?

Financial flexibility is defined by Gamba and Triantis (Journal of Finance 2008) as “the ability of a firm to access and restructure its financing at a low cost.” Flexibility lessens the underinvestment problems if access to capital is limited and helps to avoid financial distress.

What is flexibility of financial plan?

Flexibility is the ability to bend without breaking (or going broke). Every financial guru out there will have their interpretation of what it means to be financially flexible. Essentially, it boils down to accessing funds to satisfy a crisis or opportunity.

What is meant by financial flexibility How is it related to leverage?

Definition. The accounting term financial flexibility is used to describe a company's ability to react to unexpected expenses and investment opportunities. Financial flexibility is usually assessed by examining the company's use of leverage as well as cash holdings.

What is financial flexibility?

Financial flexibility is defined as a firm’s ability in mobilizing finances in a small period of time, during an unexpected event or an investment opportunity. To be able to gather funds during an unexpected event or while seizing an investment opportunity, in a short period of time, provides a maximized creation of value.

How is financial flexibility measured?

Financial flexibility is measured through a company’s cash holdings and leverage, i.e. ability to borrow debt. Some of the ways financial flexibility is achievable are through profit management, budgeting, and choosing strategic choices of finances.

What is financial flexibility?

Financial flexibility is the ability to react and adapt to changing financial conditions. The current financial stress in agriculture has highlighted the importance of a farm maintaining financial flexibility. Financial flexibility is difficult to define with one financial ratio or measure. It can be thought of as the combination ...

What is the most important factor in financial flexibility?

But perhaps the most important factor of financial flexibility is working capital. Working capital is simply defined as the difference between current assets and current liabilities. Current assets are defined as assets that can be converted to cash easily and with little or no penalty.

Why is working capital important for farmers?

Adequate working capital is not the only necessary ingredient to withstand downturns in prices and short-term fluctuations, but a farmer must monitor and protect working capital. Maintaining strong working capital is one of the key pieces to financial flexibility.

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1.What is financial flexibility and why is it so important?

Url:https://www.cnbc.com/select/what-is-financial-flexibility/

7 hours ago  · Having financial flexibility doesn’t mean loosening the reins and throwing caution to the wind when it comes to your money. It means striking a healthy balance between planning for today and the ...

2.What Is Financial Flexibility? | Purchasing Power Corp

Url:https://corp.purchasingpower.com/article/what-financial-flexibility

26 hours ago  · This is why it’s important to have some financial flexibility. Having financial flexibility doesn’t mean loosening the reins and throwing caution to the wind when it comes to your money. It means striking a healthy balance between planning for today and the future, explains Ashley Russo, a financial advisor for Northwestern Mutual .

3.What is Financial Flexibility? - The FinAnalyst

Url:https://thefinanalyst.com/what-is-financial-flexibility/

33 hours ago  · This is why it’s important to have some financial flexibility. Having financial flexibility doesn’t mean loosening the reins and throwing caution to the wind when it comes to your money. It means striking a healthy balance between planning for today and the future, explains Ashley Russo, a financial advisor for Northwestern Mutual.

4.Spotlight on Economics: The Importance of Financial …

Url:https://www.ag.ndsu.edu/news/columns/spotlight-on-economics/spotlight-on-economics-the-importance-of-financial-flexibility/

33 hours ago A healthy balance between planning for today and the future is more important than you might think. Money management can be stressful, especially if you’ve been trying to create a financial plan without help from a professional. With so many future life events to take into account — getting married, starting a family, buying a home, … What is financial flexibility and why is it so ...

5.Solved: What is meant by the term financial flexibility, and …

Url:https://www.chegg.com/homework-help/meant-term-financial-flexibility-important-chapter-8-problem-16tyk-solution-9780170253703-exc

16 hours ago  · Financial flexibility is the ability to manage expenses and make everyday life affordable. It is the financial stage beyond living paycheck-to-paycheck. It means being smart about how we use our monthly income and finding ways to make our money do more so that we are able to pay bills on time, take a vacation, have an emergency fund for unexpected …

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