FIN 534 RANK Imagine Your Future /fin534rank.com FIN 534 RANK Imagine Your Future /fin534rank.com | Page 168

a. Swim Suits' current asset financing policy calls for exactly matching
asset and liability maturities.
b. Swim Suits' current asset financing policy is relatively aggressive;
that is, the company finances some of its permanent assets with short-
term discretionary debt.
c. Swim Suits follows a relatively conservative approach to current asset
financing; that is, some of its short-term needs are met by permanent
capital.
d. Without income statement data, we cannot determine the
aggressiveness or conservatism of the company's current asset financing
policy.
e. Without cash flow data, we cannot determine the aggressiveness or
conservatism of the company's current asset financing policy.
2. Which of the following statements is CORRECT?
a. A firm that makes 90% of its sales on credit and 10% for cash is
growing at a constant rate of 10% annually. Such a firm will be able to
keep its accounts receivable at the current level, since the 10% cash sales
can be used to finance the 10% growth rate.