The Maturity Matching or "Self-Liquidating" Approach Involves the Financing of Permanent

question 53

True/False

The maturity matching or "self-liquidating" approach involves the financing of permanent net operating working capital with combinations of long-term capital and short-term capital depending on the level of interest rates. When short-term rates are high, short-term assets will be financed with long-term debt to reduce cost and risk.

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Definitions:

Increases Assets

Transactions or events that enhance the economic resources controlled by a business.

Purchase Requisition

An internal document used within an organization to request authorization for a purchase before a purchase order is issued.

Purchase Order

An official document issued by a buyer committing to pay the seller for the sale of specific products or services to be delivered in the future.

Credit Memorandum

A document issued by a seller indicating a reduction in the amount that a buyer owes, often due to a return or refund.