Bradford Maintenance,a firm that provides lawn care services,has some seasonal variations in its cash flow needs,since much of the demand for its services is in the summer months.It uses long-term sources of funds to finance its assets such as its fleet of vehicles and lawn-care equipment and for the permanent funds that it must have at all times.For its peak seasonal needs it uses some short-term debt.What best describes the financial policy being followed by Bradford?

Question

Quizplus · Accepted Answer

Bradford Maintenance is following a conservative financial policy by using long-term sources of funds to finance both its permanent assets and the permanent portion of its current assets, while only using short-term debt for peak seasonal needs. This approach minimizes risk by ensuring that long-term assets are financed with long-term funds, providing stability and reducing the risk of needing to refinance short-term debt under potentially unfavorable conditions.

Bradford Maintenance,a Firm That Provides Lawn Care Services,has Some Seasonal