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Figure 6-5 Matching long-term and short-term needs Dollars Temporary current assets L Short-term financing Permanent current Figure 6-5: Is this company growing? Explain.

Figure 6-5: How many years are represented?

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Answer #1

From the graph it is clear that the company is growing . It is clear that there is a increasing trend in permanent current assets ( base amounts of cash, AR, Inventory) over time. The Fixed Asset amount is also increasing steadily over time. If we look at the seasonal spike in temporary current assets, that is also growing in volume. All these things indicate that the company is growing.

If we see , there are three peaks in the temporary current assets , that represent three seasonal peaks. So we can understand that three periods have been represented here.

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