Economics · Working Capital Management
A company is reviewing its working capital financing strategy. It wants to minimize financing costs even if it means taking on a higher liquidity risk. Which of the following BEST describes an aggressive policy that matches these objectives?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It holds high levels of cash and inventory, financed mainly by long-term sources.
- 2It uses long-term finance to fund all permanent and fluctuating current assets.
- 3It matches short-term finance to fluctuating assets and long-term finance to permanent assets.
- 4It uses short-term finance to fund both fluctuating and a portion of permanent current assets.✓
Correct answer
It uses short-term finance to fund both fluctuating and a portion of permanent current assets.
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