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Topic
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Becker Question –
The working capital financing policy that subjects the firm to the greatest risk of being unable to meet the firm’s maturing obligations is the policy that finances:
a. Fluctuating current assets with short-term debt
b. Permanent current assets with long-term debt
c. Permanent current assets with short-term debt
d. Fluctuating current assets with long-term debt
The answer is c. My question is why “a” does not have the greatest risk, as fluctuating current asset provides more uncertainty and more risky. When short-term debt becomes mature, company may not have money to repay debt.
AUD-74,75 11/2014
REG-80 04/2015
FAR-74, 91 11/2015
BEC-79 08/2015
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