Which working capital financing strategy finances all fixed assets and permanent current assets with long-term capital, financing temporary current assets with short-term debt?
AMaturity Matching (Hedging) Approach
BCapital Rationing Approach
CConservative Approach
DAggressive Approach
Explanation
* Maturity Matching (Hedging Approach) matches asset maturities with debt maturities: permanent assets funded with long-term debt, seasonal assets with short-term debt.
* Balances liquidity risk against interest expense optimization.
* Prevents refinancing risk during short-term credit contractions.
Exam Relevance
- Topic: Working Capital Management
- Subtopic: Financing Strategies

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