2. Financing current assets What are the current asset financing strategies that firms adopt? Firms manage...
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2. Financing current assets What are the current asset financing strategies that firms adopt? Firms manage a variety of current assets. Permanent current assets are needed for the firm to maintain its business, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles. Each firm must devise a financing strategy that best fits its business situation and best manages its risk. All fixed assets and the nonseasonal portion of current assets, as well as seasonal needs of current assets, are financed with long-term capital. Which current asset financing policy is consistent with this statement? Aggressive approach Conservative approach Maturity matching approach All fixed assets and the nonseasonal portion of current assets are financed with long-term capital, and seasonal needs of current assets are financed with short-term loans. Which current asset financing policy is consistent with this statement? Maturity matching approach Conservative approach Aggressive approach Long-term capital finances some of the permanent current assets, but short-term debt finances all temporary current assets and some permanent assets. Which current asset financing policy is consistent with this statement? Aggressive approach Conservative approach Maturity matching approach 2. Financing current assets What are the current asset financing strategies that firms adopt? Firms manage a variety of current assets. Permanent current assets are needed for the firm to maintain its business, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles. Each firm must devise a financing strategy that best fits its business situation and best manages its risk. All fixed assets and the nonseasonal portion of current assets, as well as seasonal needs of current assets, are financed with long-term capital. Which current asset financing policy is consistent with this statement? Aggressive approach Conservative approach Maturity matching approach All fixed assets and the nonseasonal portion of current assets are financed with long-term capital, and seasonal needs of current assets are financed with short-term loans. Which current asset financing policy is consistent with this statement? Maturity matching approach Conservative approach Aggressive approach Long-term capital finances some of the permanent current assets, but short-term debt finances all temporary current assets and some permanent assets. Which current asset financing policy is consistent with this statement? Aggressive approach Conservative approach Maturity matching approach
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1 Option b is correct optionConservative approah When long term debt finances part of current assets ... View the full answer
Related Book For
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Posted Date:
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