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. Firms must devise a financing 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. Description Financing Policy This current asset financing policy exposes the firm to the greatest amount of risk from rising interest rates and loan Long-term capital finances all fixed assets and the nonseasonal portion of current assets, and short-term loans finance seasonal needs of current assets. Long-term capital finances all permanent current assets and some temporary financing needs