A firm with a very low current ratio in comparison to the industry standard could lower the risk of unavailable short-term funds by moving toward__________ financing strategy.
A) a seasonal
B) the conservative
C) a permanent
D) the aggressive

Question

Quizplus · Accepted Answer

The conservative financing strategy involves relying less on short-term debt and more on long-term debt and equity financing. This could lower the risk of unavailable short-term funds for a firm with a very low current ratio, as they would have more stable and predictable sources of funding. A seasonal financing strategy would not address the issue of a low current ratio, and an aggressive financing strategy would increase the firm's reliance on short-term debt, which could exacerbate the issue. A permanent financing strategy is not a commonly recognized term in finance.

A Firm with a Very Low Current Ratio in Comparison