Under the maturity matching strategy, a firm funds all seasonal working capital needs with short-term borrowing.

Question

Quizplus · Accepted Answer

Under the maturity matching strategy, a firm matches the maturity of its assets and liabilities, which means that seasonal working capital needs would be funded with short-term borrowing instead of long-term borrowing. This helps to minimize the risk of being caught with long-term debt when short-term assets are needed, and vice versa.

Under the Maturity Matching Strategy, a Firm Funds All Seasonal