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      Question

      A company follows a conservative working capital

      financing policy. Which of the following statements best describes its financing approach?
      A It intentionally maintains a current ratio below 1 to maximise return on equity. Correct Answer Incorrect Answer
      B It relies heavily on short-term borrowings to finance even its permanent working capital Correct Answer Incorrect Answer
      C It follows perfect matching of maturities between assets and liabilities Correct Answer Incorrect Answer
      D It uses lung-term funds to finance both permanent and a portion of temporary working capital Correct Answer Incorrect Answer

      Solution

      The correct answer is D

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