Mindlap . Cengage Lear × Aggressive vs. Conserva· C 0 ngcengage.com/static/nb/u/

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Mindlap . Cengage Lear × Aggressive vs. Conserva· C 0 ngcengage.com/static/nb/u/index.html?nbld-641827&nbNodelds; 23706580saeisaN 5% MINDTAP Assignment 15-Working Capital Management Due on Dec 10at11 PM PST Attempts: Average: 14 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 fluctua seasonally or with business cydles. Firms must devise a financing strategy that best fits their business situation a that best manages their risk. Use the following table to identify the different current asset financing policies. Description Financing Policy Long-term capital finances all fioxed assets and the nonseasonal portion of current assets, and short-term loans finance seasonal needs of current assets Long-term capital finances all fixed assets and the nonseasonal portion of current assets, as well as seasonal needs of current assets Conservative approach Maturity matching approach Aggressive approach Long-term capital finances some permanent current assets, but short-term debt finances all temporary current assets and the remaining permanent current assets. Suppose a firm wants to take advantage of an upward-sloping yiald curve. If the firm believes that interest rates wil stay constant and it wants to use the current yield curve to bolstor profits, which approach should the firm folow? O Conservative approach O Maturity matching approach Aggressive approach

Explanation / Answer

Answers

1-

maturity matching approach

2-

conservative approach

3-

Aggressive approach

4-

aggressive approach

Answers

1-

maturity matching approach

2-

conservative approach

3-

Aggressive approach

4-

aggressive approach

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