A firm following an aggressive approach to working capital policy will finance all of the fixed assets with __________,and some of the firm's permanent current assets will be financed with __________.

Question

Quizplus · Accepted Answer

An aggressive approach to working capital policy involves financing fixed assets with long-term capital and some permanent current assets with short-term nonspontaneous sources of funds. This allows the firm to benefit from the lower cost of short-term financing and to maintain flexibility in its capital structure. Commercial paper and corporate bonds are both forms of long-term capital, so choices B and D are incorrect. Choice E is incorrect because corporate bonds are a form of long-term capital, not short-term financing. Therefore, the best answer is C.

A Firm Following an Aggressive Approach to Working Capital Policy