Working Capital Financing Quiz
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Questions and Answers

Which of the following statements about working capital financing is correct?

  • c. A conservative policy uses short-term debt to finance fixed assets
  • a. Long-term debt is less risky than short-term debt (correct)
  • b. The matching principle indicates that fluctuating current assets should be financed by long-term debt
  • d. Short-term debt is more expensive than long-term debt

    • According to the matching principle, how should fluctuating current assets be financed?

  • d. By a combination of short-term debt and long-term debt
  • a. By short-term debt (correct)
  • b. By long-term debt
  • c. By equity financing

    • Which policy uses long-term debt to finance fixed assets?

  • c. Conservative policy (correct)
  • a. Aggressive policy
  • d. Neutral policy
  • b. Moderate policy

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