A firm that tends to finance permanent assets with long-term debt and seasonal assets with short-term borrowing is following

Question

Quizplus · Accepted Answer

The given firm is matching the financing strategy by financing permanent assets with long-term debt, which has a longer maturity period, and financing seasonal assets with short-term borrowing, which aligns with the shorter operating cycle of the assets. This helps in maintaining appropriate matching between the assets and the funding source, reducing the risk of mismatched financing, and ensuring efficient utilization of funds. Therefore, option C is the correct answer. Options A and B are not relevant to the situation described, and option D is an incorrect statement.

A Firm That Tends to Finance Permanent Assets with Long-Term