Review The Relationship Between Components Of Internal Financial Flexibility

A better improvement in dealing with unprecedented financial problems and an efficient use regarding incoming investment opportunities would be gained through knowing the relationship between components of internal financial flexibility of firms. Management of internal financial flexibility is directly related to how we use cash, debt capacity, and their interaction during encountering crisis and external shocks. The present study, hence, examines the relationship between the components of the internal financial flexibility of the 69 firms listed in Tehran Stock Exchange during 2003 up to 2012. Therefore, the extracted data were tested and analyzed using descriptive statistical methods and panel data patterns. The results indicate that the debt capacity is not effective in predicting the retention amount of cash resources; yet, the amount of cash resources retention is considered as one of the factors influencing in determining the debt capacity of firms.