The correct answer is Financial slack Financial SlackBusinesses go through various conditions in their lifetime. There are times when companies earn high income which can be termed as profits or growth of revenues. On the other hand, some companies may go through a downturn in sales, profits, or revenues. In order to sail through such conditions, a company must have extra money. This extra money that can be used when the company is in trouble is known as the financial slack of the company. Financial slack is the untapped debt potential of a company. It may be availed from unused debt capacity, un-utilized lines of credit, excess liquid assets, and various other sources of cash. Slack is an important measure related to the debt capacity of a company. If a company uses all of its debt capacity, the amount of financial slack will be zero. In such conditions, the company will be unable to meet unexpected costs that may be necessary for the good health of the company. Hence, Companies strive to stockpile internally generated cash. Such a cash reserve is called Financial slack. Additional Information Margin of Safety- Margin of safety is a principle of investing in which an investor only purchases securities when their market price is significantly below their intrinsic value. Financial Float- In financial terms, the float is money within the banking system that is briefly counted twice due to time gaps in registering a deposit or withdrawal.