Given a flexible financing policy,a growing firm generally has a permanent requirement for:
A)both current and long-term assets.
B)long-term assets only.
C)short-term debt.
D)both short- and long-term debt.
E)current assets and short-term debt.

Question

Quizplus · Accepted Answer

A growing firm requires both current and long-term assets to support its expansion plans. Flexible financing policy allows the firm to obtain the necessary funds to invest in assets, and this investment in turn leads to an increase in the firm's sales and profits. However, the firm must also maintain a certain level of liquidity to meet its short-term obligations, hence it also needs short-term assets like cash and accounts receivable, which can be financed with short-term debt.

Given a Flexible Financing Policy,a Growing Firm Generally Has a Permanent