Question

Funding both the seasonal and permanent asset requirements with short-term sources ____ Is the principle behind...

Funding both the seasonal and permanent asset requirements with short-term sources

____

Is the principle behind the maturity matching working capital policy

Represents a conservative working capital policy

Is the financing approach of an aggressive working capital policy

Is an example of the self-liquidity approach

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Homework Answers

Answer #1

ANSWER

CORRECT ANSWER : Option (c) "Is the financing approach of an aggressive working capital policy"

EXPLANATION

  • As we all know that the Working Capital requirements can be managed by Both the Sources {ie the Long-term Sources & Short-term Sources of funds}
  • However, the Selection of such Sources depends on the type of Company and many other factors.
  • There are Different Approaches to Working Capital Financing.
  • Some talks about "Financing through long term sources" while some talks about "Financing through Short term sources".
  • One of the Approaches to "Working Capital Financing" is the "AGGRESSIVE APPROACH " which focuses on Financing through Short-term Sources of Funds. Here Short term Funds are used to Finance BOTH - Seasonal Current Assets as well as Permanent Current Assets.
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