Final answer:
A flexible short-term financing strategy implies having surplus cash and minimal short-term borrowing. This provides financial flexibility and reduces dependency on external lenders, allowing the company to maintain control of its operations.
Step-by-step explanation:
A flexible short-term financing strategy implies having surplus cash and minimal short-term borrowing. The advantage of such a strategy is that it allows the company to meet its short-term financial obligations without relying heavily on external financing.
For example, if a company has surplus cash, it can use that cash to cover immediate expenses, such as payroll or inventory purchases, instead of taking on additional short-term loans. By minimizing short-term borrowing, the company can avoid the costs associated with interest payments and potential fees.
This strategy also provides the company with financial flexibility and reduces its dependency on external lenders. It allows the company to maintain control of its operations and financial decisions, without the interference of shareholders or the need to issue stock.