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Question
A recent financial magazine indicated that the airline industry has poor financial flexibility. What is meant by financial flexibility, and why is it important?
Step-by-Step Solution
VerifiedFinancial flexibility can be defined as meeting uncertainties by maintaining the amount and timing of cash flows. Financial flexibility reduces the risk associated with the business entity.
A financial planner is an individual who helps a business entity or personal individual maintain their cash flow. Cash flow is maintained so that the business entity can meet any unforeseen situation.
Financial flexibility can be defined as the business entity's ability to maintain the time and amount of cash flow to meet the uncertainties.
Financial flexibility is important for the business entity because it lowers the risk of the business entity. It reduces the risk of failure of the business entity.