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Which of the following is not a condition under which a prudent manager would accept some risk in financing?

A. Predictable cash-flow patterns

B. Inventory is highly perishable.

C. The price of inventory is stable.

D. Basic access to capital markets

User Vsm
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Final answer:

A prudent manager would not accept some risk in financing when the inventory is highly perishable, as this condition implies significant risk of loss and is not suited for risk-taking in financing.

Step-by-step explanation:

The condition under which a prudent manager would not accept some risk in financing is when the inventory is highly perishable. Accepting risk in financing is generally more favorable under circumstances such as predictable cash-flow patterns, stable inventory prices, and basic access to capital markets. These conditions imply a certain level of stability and predictability, making risk-taking more palatable and manageable for a firm. In contrast, holding highly perishable items introduces a significant risk of loss, as these items can become unsellable if not managed precisely, which is not well-suited to the volatility associated with accepting risks in financing.

User Sarel Esterhuizen
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