A Conservatively Financed Firm Would

question 80

Multiple Choice

A conservatively financed firm would

• A) use long-term financing for all fixed assets and short-term financing for all other assets.
• B) finance a portion of permanent assets and short-term assets with short-term debt.
• C) use equity to finance fixed assets, use long-term debt to finance permanent assets, and use short-term debt to finance fluctuating current assets.
• D) use long-term financing for three items: permanent current assets, fixed assets, and a portion of the short-term fluctuating assets. Then use short-term financing for all other short-term assets.

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Definitions:

Liability Insurance

Insurance covering loss caused by the negligence of oneself or one’s employees.

Retirement Income

The funds or revenue sources a person relies on after retiring from active employment or business.

Disability Insurance

A type of insurance that provides income in the event a worker is unable to perform their work and earn money due to a disability.

Insurance Corporation

A company that offers insurance policies to individuals or other entities, covering a range of risks.