Which of the Following Working Capital Financing Policies Subjects the Firm

question 31

Multiple Choice

Which of the following working capital financing policies subjects the firm to the greatest risk?

• A) financing fluctuating current assets with long-term debt
• B) financing permanent current assets with long-term debt
• C) financing permanent current assets with short-term debt
• D) financing fluctuating current assets with short-term debt

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Definitions:

Insurance Policy

A contract between an individual or entity and an insurance company, detailing the terms for the payment of claims in the event of loss.

War Zone

An area where armed conflict is taking place, often recognized as such by military authorities.

Killed

The action of causing the death of a living entity, whether intentionally or unintentionally.

Duty

An obligation or responsibility to act in a certain way, often imposed by law, social norms, or professional standards.