With the matching approach to meeting the financing needs of the firm, fixed and permanent current assets are financed with _____.
A) long-term debt but not equity funds
B) equity funds but not long-term debt
C) both long-term debt and equity funds
D) neither long-term debt nor equity funds

Question

Quizplus · Accepted Answer

Fixed and permanent current assets are long-term assets, and because they have a long-term life, they should be financed with long-term funds such as long-term debt and equity funds. Therefore, both long-term debt and equity funds can be used to finance fixed and permanent current assets.

With the Matching Approach to Meeting the Financing Needs of the Firm