Some portion of fixed assets and the nonseasonal portion of current assets are financed with long-term capital, and all seasonal needs of current assets and the remaining portion of fixed assets are financed with short-term loans. Which current asset financing policy is consistent with this statement

Respuesta :

Answer: Aggressive approach

Explanation:

With an Aggressive approach to financing, the management is trying to take advantage of the fluctuations in interest rates by using short term loans to finance some parts of fixed assets as well as current assets. This is what is happening here so the management must be using aggressive financing.

This is unlike the conservative approach where fixed assets are financed with long term financing like stocks and bonds with the logic being that both of them have similar lifetimes and so will supply adequate cashflow for the payment of interest overtime.