In the aggressive financing strategy, a firm anticipating a large increase in sales should finance the increase in working capital with
A) a line of credit.
B) the sale of a bond issue.
C) the sale of common stock.
D) a long-term note from the bank.

Question

Quizplus · Accepted Answer

A line of credit is the best choice for financing an increase in working capital for a firm anticipating a large increase in sales through an aggressive financing strategy. This provides the firm with flexibility in borrowing as needed to meet short-term financing needs that are likely to arise. A bond issue or stock sale would be more appropriate for long-term financing needs, while a long-term note may not provide the flexibility needed for an aggressive financing strategy.

In the Aggressive Financing Strategy, a Firm Anticipating a Large