Given below are an Assertion and a Reasoning regarding financial management: Assertion: A firm following a Hedging (Maturity Matching) Approach to working capital management will typically finance its permanent current assets and fixed assets with long-term funds, while utilizing short-term debt only to finance its seasonal or temporary current assets. Reasoning: This approach minimizes the risk of being unable to repay debt when it becomes due because the maturity of the debt is matched with the duration for which the funds are required, thereby balancing the lower cost of short-term debt with the stability of long-term financing. Choose the correct option:

Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): Liberal credit policies increase the probability of defaults and the associated bad debt losses. Reason (R): Relaxing credit standards will generally increase sales but may reduce the quality of receivables. In the light of the above statements, choose the most appropriate answer from the options given below:

A company is facing a cash shortage due to rapid sales growth and management is considering an 'aggressive' working capital financing strategy. The company currently has permanent current assets of $5 million and fluctuating current assets ranging from $2 million to $4 million. It is financed by $6 million of long-term debt. Which of the following describes the most likely situation under an aggressive financing strategy?