ACCA FM · Chapter 5 · Question 6 of 10
Which of the following describes an aggressive working capital funding policy?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Using short-term finance to fund all fluctuating current assets and some permanent current assets
Explanation
An aggressive policy relies heavily on short-term finance, which is usually cheaper but must be renewed frequently, increasing refinancing and interest rate risk. A conservative policy uses long-term finance for some fluctuating current assets as well, and a matching (moderate) policy funds permanent assets long term and fluctuating current assets short term.
More Cash management and working capital funding MCQs
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