The maturity matching, or "self-liquidating, " approach to financing involves obtaining the funds for permanent current assets with a combination of long-term capital and short-term capital that varies depending on the level of interest rates.When short-term rates are relatively high, short-term assets will be financed with long-term debt to reduce costs.

Question

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The maturity matching, or "self-liquidating," approach to financing involves matching the maturity of the assets being financed with the maturity of the financing. Therefore, short-term assets are financed with short-term debt, and long-term assets are financed with long-term debt, rather than varying the capital structure based on interest rate levels.

The Maturity Matching, or "Self-Liquidating, " Approach to Financing Involves