A firm following an aggressive approach to working capital policy will finance all of the fixed assets with , and
Some of the firm's permanent current assets will be financed with .
A)short-term nonspontaneous sources of funds; long term capital
B)commercial paper; long term capital
C)long term capital; short-term nonspontaneous sources of funds
D)long term capital; corporate bonds
E)short-term nonspontaneous sources of funds; corporate bonds

Question

Quizplus · Accepted Answer

An aggressive approach to working capital policy means financing fixed assets with long-term capital and financing some of the firm's permanent current assets with short-term nonspontaneous sources of funds. Among the given options, only choice C matches this approach. Choice A is incorrect because it suggests financing all fixed assets with short-term nonspontaneous sources of funds. Choice B is incorrect because commercial paper is a short-term spontaneous source of funds, not long-term capital. Choice D is incorrect because it suggests financing all current assets with long-term capital. Choice E is incorrect because it suggests financing permanent current assets with corporate bonds, which is not a common practice.

A Firm Following an Aggressive Approach to Working Capital Policy