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Given the nature of corporate financing and investment decisions, that focus on long-term operations is appropriate. In periods of rapid change where long-term outlooks are uncertain or in flux, a focus on short-term decision-making is critical.

The most common rule of thumb for short-term operations is to finance long-term needs for capital with long-term sources and short term needs with short-term sources. Given that rules of thumb are for normal operations, for the following situations identify when it would be appropriate to finance with each of the following methods:

- Short-term needs with long-term assets

- Long-term needs with short-term assets

- Seasonal variations with short-term assets

For each, use an ex of when it would be appropriate to follow that policy in addition to your explanation.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M948878

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