If a firm uses only short-term debt to finance the fluctuating level of current assets, the firm is said to be using the ____ approach to asset financing.
A) aggressive
B) moderate
C) matching
D) conservative

Question

Quizplus · Accepted Answer

The matching approach to asset financing involves using short-term debt to finance current assets and long-term debt to finance fixed assets. This approach helps to ensure that the firm's debt maturity structure matches the maturity of its assets.

If a Firm Uses Only Short-Term Debt to Finance the Fluctuating