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Swim Suits Unlimited Is in a Highly Seasonal Business,and the Following

Question 66

Multiple Choice

Swim Suits Unlimited is in a highly seasonal business,and the following summary balance sheet data show its assets and liabilities at peak and off-peak seasons (in thousands of dollars) :  Peak  Off-Peak  Cash $50$30 Marketable securities 020 Accounts receivable 4020 Inventories 10050 Net fixed assets 500500 Total assets $690$620\begin{array} { l r r } & \text { Peak } & \text { Off-Peak } \\\text { Cash } & \$ 50 & \$ 30 \\\text { Marketable securities } & 0 & 20 \\\text { Accounts receivable } & 40 & 20 \\\text { Inventories } & 100 & 50 \\\text { Net fixed assets } & 500 & 500 \\\text { Total assets } & \$ 690 & \$ 620 \\\hline\end{array}
?  Payables and accruals $30$10 Short-term bank debt 500 Long-term debt 300300 Common equity 310310 Total claims $690$620\begin{array} { l r r } \text { Payables and accruals } & \$ 30 & \$ 10 \\\text { Short-term bank debt } & 50 & 0 \\\text { Long-term debt } & 300 & 300 \\\text { Common equity } & 310 & 310 \\\text { Total claims } & \$ 690 & \$ 620\end{array}
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From this data we may conclude that


A) Swim Suits' current asset financing policy calls for exactly matching asset and liability maturities.
B) Swim Suits' current asset financing policy is relatively aggressive;that is,the company finances some of its permanent assets with short-term discretionary debt.
C) Swim Suits follows a relatively conservative approach to current asset financing;that is,some of its short-term needs are met by permanent capital.
D) Without income statement data,we cannot determine the aggressiveness or conservatism of the company's current asset financing policy.
E) Without cash flow data,we cannot determine the aggressiveness or conservatism of the company's current asset financing policy.

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