Ideally, permanent current assets should be financed exclusively with short-term borrowings.

Question

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Permanent current assets are the assets that a company needs to carry on its daily operations and which are expected to remain consistent over the long term. It is not recommended to finance these assets solely with short-term borrowings as it can lead to liquidity problems, especially during periods of economic downturns or unexpected events. Long-term financing options such as equity or long-term debt may be more suitable for financing permanent current assets.

Ideally, Permanent Current Assets Should Be Financed Exclusively with Short-Term