The Aggressive Financing Strategy Is Risky in Two Respects: the Firm

question 218

Multiple Choice

The aggressive financing strategy is risky in two respects: the firm operates with a low level of ________, and the firm has only a limited amount of ________ capacity.

• A) current liabilities; short-term borrowing
• B) net working capital; short-term borrowing
• C) current assets; long-term borrowing
• D) net working capital; long-term borrowing

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Definitions:

Individual Stock

A share representing ownership in a specific company, entitling the holder to a claim on part of the company’s assets and earnings.

Bond Owners

Individuals or entities that hold bonds, which are debt securities, issued by corporations or governments.

Organization Issuing

Refers to entities (like corporations, governments, or NGOs) that release or distribute something, often securities or official documents.

Future Revenues

Expected income from sales or services to be received in the future.