According to the Hedging Principle,which of the Following Assets Should

question 90

Multiple Choice

According to the hedging principle,which of the following assets should be financed with permanent sources of financing?

• A) seasonal expansions of inventory
• B) seasonal increases in accounts receivable
• C) levels of inventory and accounts receivable the firm maintains throughout the year
• D) none of the above

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Definitions:

Budgeted Unit Sales

The number of units a company plans or expects to sell over a certain period, as estimated during the budgeting process.

Finished Goods Inventory

The stock of completed products that are ready to be sold but have not yet been distributed or delivered to customers.

Budgeted Required Production

An estimate of the quantity of production (products or services) that a company plans or needs to fulfill future sales targets or operational goals.

Budgeted Sales

Projected sales for a future period, estimated based on factors like historical sales data, market trends, and economic forecasts.