FIN 419 Week 3 DQs - 7658

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3number
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  • Posted on: Thu 12 Apr, 2012
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Request Description

Under what circumstances would you use either one?

What is an asset?

 

What is a liability?

 

What is the difference between assets and liabilities? 

Solution Description

Generally, under the conservative approach, a firm faces less risk of shortage of funds, so when a company is already facing a shortage of funds it should use the conservative approach or matching approach. An aggressive approach may be preferred over the conservative approach due to flexibility and cost advantage. Usually, the short term financing is less expensive than the long term financing. It is relatively easy to refund