MINDTAP Chapter Review 15-Working Capital Management Due on Dec 7 at 1159 PM PST
ID: 2792829 • Letter: M
Question
MINDTAP Chapter Review 15-Working Capital Management Due on Dec 7 at 1159 PM PST 3. Current asset financing policies Aa Aa How do firms finance their operating current assets? A firm's asset or capital requirements grow over time and usually exhibit temporal (seasonal) variation. Firms must solve the finance their assets with a combination of short- and long-term financing. The following graph exhibits this relationship for a particular firm. challenge of how Asset Requirements of the following best characterizes this firm's policy of financing assets? O Aggressive policy O Conservative policy Moderate policy Note the shaded region on the preceding graph, Which of the folowing statements best describes the firm's situation during this time? O The frm must rely on short-term borrowing. 9 The firm has excess capital to most n cash or marketable 3 4 8Explanation / Answer
The correct choice is moderate policy
Explanation : - The firm has made use of long term financing on two occasions and has relied on other sources of finacing during the rest of the time. Thus the firm has a moderate policy of financing assets.
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The correct choice is : The firm must rely on short term financing.
Explanation : - The shaded region indicates the time during which the firm has not made use of long term financing and therefore it must rely on other sources of financing such as short term financing.
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