Which One of the Following Statements Is NOT True

question 56

Multiple Choice

Which one of the following statements is NOT true?

• A) Firms using matching maturity strategy fund all working capital needs with long-term borrowing.
• B) Long-term financing strategy relies on long-term debt to finance both capital assets and working capital.
• C) All working capital and a portion of fixed assets are funded with short-term debt when firms use the aggressive funding strategy.
• D) Firms using a matching maturity strategy fund all working capital needs with short-term borrowing.

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Definitions:

Minimum ATC

Minimum ATC, or minimum average total cost, is the lowest point on the average total cost curve, representing the most efficient scale of production for a firm.

Entry Barriers

Obstacles that make it difficult for new competitors to enter a market, which may include high capital requirements, brand loyalty, or regulatory policies.

Marginal Costs

The cost of producing one additional unit of a good or service.

Profit-Maximizing

The process by which a company determines the price and output level that returns the greatest profit.