4. Current asset financing policies Aa Aa Firms manage a variety of current assets. Permanent current assets are necessary for firms to maintain their businesses, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles Fim s ust devise a finanong strategy that best fits their business situation and that best manages their risk. Use the following table to identify the different current asset financing policies. Financing Policy This current asset financing policy tends to be the safest current asset financing policy; however, it also tends to be less profitable than the other policies. Long-term capital finances some permanent current assets, but short-term debt finances all temporary current assets and the remaining permanent current assets Long-term capital finances all fixed assets and the nonseasonal portion of current assets, and short-term loans finance seasonal needs of current assets. Suppose a firm occasionally faces demand for short-term credit but usually has an excess of short-term capital to finance current assets. Which approach is the firm following? O Conservative approach O Maturity matching approach O Aggressive approach