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Moderate Working Capital Financing Approach 17.10.Marian Pardoo, the chief financial officer of Envirosafe Chemical Company, believes in a moderate approach of financing following the matching
Moderate Working Capital Financing Approach 17.10.Marian Pardoo, the chief financial officer of Envirosafe Chemical Company, believes in a moderate approach of financing following the matching principle. Some of the projected balance sheet accounts of the company for the end of next year follow: Permanent Current Assets $ 15,000 5,000 80,000 Current and Fixed Assets Cash $ 30,000 Accounts Receivable 15,000 Inventory 130,000 Fixed Assets 500,000 Total Assets $ 675,000 Liabilities and Equity Accounts Payable $ 20,000 Short-Term Debt Long-Term Debt Common Equity 450,000 Total Liabilities and Equity $ 675,000 How much should Marian finance by short-term debt and long-term debt to conform to the matching principle? p. 433 p. 434 Aggressive Working Capital Financing Approach 17-11. Use the same data given in problem 17-10. Marian's boss, Ann Lowell, is the vice president of finance of Envirosafe Chemical Company and she expects interest rates to decrease in the future and, hence, would like to follow a very aggressive policy using a large amount of short-term debt and a small amount of long-term debt. She would also like to decrease net working capital to $25,000. How much should Ann finance by short-term debt and how much by long-term debt to conform to her aggressive approach? Different Working Canital Financing Annrach
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