Short-term projects should be financed with short-term funding while long-term projects should be funded with long-term funding. This is principle is known as the:
A)Working Capital Principle
B)Maturity Matching Principle
C)Conservative Financing Principle
D)Spontaneous Financing Principle

Question

Short-term projects should be financed with short-term funding while long-term projects should be funded with long-term funding.   This is principle is known as the: ​
A)Working Capital Principle ​
B)Maturity Matching Principle​
C)Conservative Financing Principle ​
D)Spontaneous Financing Principle ​

Quizplus · Accepted Answer

The principle described in the question is known as the Maturity Matching Principle. This principle states that short-term projects should be financed with short-term funding while long-term projects should be funded with long-term funding. Matching the maturity of assets and liabilities helps to avoid liquidity risks and ensures that the company has the necessary funds available to meet its obligations.

Short-Term Projects Should Be Financed with Short-Term Funding While Long-Term