With regard to the hedging principle, which of the following assets should - 4573

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With regard to the hedging principle, which of the following assets should be financed with current liabilities?

a.Minimum level of cash required for year-round operations

b.Expansion of accounts receivable to meet seasonal demands

c.Machinery used to produce a firm’s inventory

d.Both a and b

e.Both b and c

The hedging principle is a matching technique, which matches the cashflows for an asset with the costs of acquiring the asset. Current liabilities are debt that mature within a year.

 
Solution Description

With regard to the hedging principle, which of the following assets should be financed with current liabilities?