With respect to working capital policy, firms most often employ
A) a cautious approach which finances short-term assets with long-term financing.
B) the principle of self-liquidating debt.
C) an aggressive approach which finances long-term assets with short-term financing.
D) the principle of liquidity optimization.

Question

Quizplus · Accepted Answer

Firms most often employ the principle of self-liquidating debt, which involves financing short-term assets with short-term liabilities that are expected to be paid off with the cash flows generated by those assets.

With Respect to Working Capital Policy, Firms Most Often Employ