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Halka Company is a no-growth firm. Its sales vary seasonally, causing net assets to differ from $320,000 to $410,000; however fixed assets remain constant at $260,000. If the firm follows a maturity matching (or moderate) working capital financing policy, then what is the most likely total of long-term debt plus equity capital?

a. $260,642

b. $274,360

c. $288,800

d. $304,000

e. $320,000

Lower total asset range $320,000

Upper total asset range $410,000

Minimum total + Min. CA = $320,000 = LT Debt + Equity

A maturity matching policy implies that the fixed assets and permanent current assets are financed with the long-term sources.  This is its most probable level of long-term financing.

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