What are the current asset financing strategies that firms adopt? Firms manage a variety of...
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What are the current asset financing strategies that firms adopt? Firms manage a variety of current assets. Permanent current assets are needed for the firm to maintain its business, and they will be carried even through downturns in business cycles. Temporary current assets fluctuate seasonally or with business cycles. Each firm must devise a financing strategy that best fits its business situation and best manages its risk. Use the following table to identify the different current asset financing policies. Long-term capital finances all permanent current assets and some temporary financing needs. O Maturity matching approach O Conservative approach O Aggressive approach Long-term capital finances all permanent assets, but short-term debt finances temporary current assets. O Aggressive approach O Conservative approach O Maturity matching approach Some portion of fixed assets and the nonseasonal portion of current assets are financed with long-term capital, and all seasonal needs of current assets and the remaining portion of fixed assets are financed with short-term loans. O Maturity matching approach O Aggressive approach Conservative approach
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