In theory, the conservative financing strategy ignores
A) current assets.
B) the spontaneous forms of short-term financing.
C) all current liabilities.
D) the high risk associated with this strategy.

Question

Quizplus · Accepted Answer

The conservative financing strategy purposely relies on the use of long-term financing, while ignoring the use of spontaneous forms of short-term financing, such as accounts payable and accrued expenses. The idea is to minimize the company's risk by relying on more stable and predictable sources of funding, even if it means sacrificing some potential cost savings from using short-term financing options. Therefore, option B is correct as it describes the purposeful exclusion of spontaneous short-term financing.

In Theory, the Conservative Financing Strategy Ignores