Which of the Following Statements Is CORRECT

question 108

Multiple Choice

Which of the following statements is CORRECT?

• A) a conservative financing policy is one where the firm finances part of its fixed assets with short-term capital and all of its net working capital with short-term funds.
• B) if a company receives trade credit under terms of 2/10 net 30, this implies that the company has 10 days of free trade credit.
• C) one cannot tell if a firm uses a current asset financing policy that matches maturities, is conservative, or is aggressive without an examination of its cash budget.
• D) if a firm has a relatively aggressive current asset financing policy vis-á-vis other firms in its industry, then its current ratio will probably be relatively high.
• E) accruals are an expensive but commonly used way to finance working capital.