Fixed assets and permanent current assets

Assignment Help Financial Management

Reference no: EM131603184

Firms choose to finance temporary current assets with short-term debt. Fixed assets and permanent current assets are financed with long-term capital (equity) plus long-term debt. The reason is

A. matching the maturities of assets and liabilities lowers default risk that firms will be unable to pay off its maturing obligations.

B. short-term interest rates have traditionally been more stable than long-term interest rates.

C. sales remain constant over the year, and financing requirements also remain constant.

D. interest rates are generally higher on the short-term debt than on the long-term debt.

Reference no: EM131603184

Questions Cloud

Balance of payments-exchange rate-foreign reserve holdings : Document the trend in Mexico's key economic indicators, such as the balance of payments, the exchange rate, and foreign reserve holdings,

Compute the total labor variance : Lewis Company's standard labor cost of producing one unit of product DD is 4 hour at the rate of $12.00 per hour. Compute the total labor variance

What macrs convention applies to the new car : On May 15, 2015, Leo purchased and placed in service a new car that cost $27,000. What MACRS convention applies to the new car

Evaluating cash flows with the net present value method : Evaluating cash flows with the NPV method the net present value (NPV) rule is considered one of the most common.

Fixed assets and permanent current assets : Fixed assets and permanent current assets are financed with long-term capital (equity) plus long-term debt.

What will your cumulative mark to market be : Suppose corn prices are $5.08 per bushel in July. What will your cumulative mark to market be?

What amount should it report as cumulative effect changing : If Kingbird's tax rate is 27%, what amount should it report as the cumulative effect changing the estimated bad rate

Discuss the problem of shortage and surplus of funds : To avoid the problem of shortage and surplus of funds, what is required in Financial management? Name the conceptand explain four points of importance.

What will be optimal upper cash limit : Fischer Inc. would like to maintain its cash account at a minimum level of $36,000. What will be its optimal upper cash limit?

User Account

All Pages