The maturity matching approach to current asset financing uses long-term funds to finance all permanent asset...
The maturity matching approach to current asset financing uses long-term funds to finance all permanent asset requirements. TRUE OR FALSE
Homework Answers
True
The maturity matching approach compensates each asset with debt instrument having almost same maturity.
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The maturity matching approach to current asset financing uses
long-term funds to finance all permanent asset...
Briefly explain maturity matching approach, aggressive approach and conservative approach of current assets financing policies? Explain...
Briefly explain maturity matching approach, aggressive approach and conservative approach of current assets financing policies? Explain what are the advantages and disadvantages of using short-term versus long-term debt in financing a firm’s current assets.
Capital assets are usually financed with Multiple Choice short-term funds. long-term funds. permanent funds self-liquidating funds
Capital assets are usually financed with Multiple Choice short-term funds. long-term funds. permanent funds self-liquidating funds
Guardian Inc. is trying to develop an asset-financing plan. The firm has $330,000 in temporary current...
Guardian Inc. is trying to develop an asset-financing plan. The firm has $330,000 in temporary current assets and $230,000 in permanent current assets. Guardian also has $430,000 in fixed assets. Assume a tax rate of 40 percent. a. Construct two alternative financing plans for Guardian. One of the plans should be conservative, with 80 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed by long-term sources. The current interest...
Lear Inc. has $1,000,000 in current assets, $450,000 of which are considered permanent current assets. In...
Lear Inc. has $1,000,000 in current assets, $450,000 of which are considered permanent current assets. In addition, the firm has $800,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 9 percent. The balance will be financed with short-term financing, which currently costs 7 percent. Lear’s earnings before interest and taxes are $400,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate...
Lear Inc. has $1,020,000 in current assets, $460,000 of which are considered permanent current assets. In...
Lear Inc. has $1,020,000 in current assets, $460,000 of which are considered permanent current assets. In addition, the firm has $820,000 invested in fixed assets a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 5 percent. Lear's earnings before interest and taxes are $420,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is...
Lear Inc. has $990,000 in current assets. $445,000 of which are considered permanent current assets. In...
Lear Inc. has $990,000 in current assets. $445,000 of which are considered permanent current assets. In addition, the firm has $790,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 6 percent. Lear's earnings before Interest and taxes are $390,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is...
Lear, Inc. has $1,800,000 in current assets, $750,000 of which are considered permanent current assets. In...
Lear, Inc. has $1,800,000 in current assets, $750,000 of which are considered permanent current assets. In addition, the firm has $1,000,000 invested in capital assets. a. Lear wishes to finance all capital assets and half of its permanent current assets with long-term financing costing 10 percent Short- term financing currently costs 5 percent. Lear's earnings before interest and taxes are $600,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. Earnings after taxes $...
Lear, Inc. has $1,400,000 in current assets, $590,000 of which are considered permanent current assets. In...
Lear, Inc. has $1,400,000 in current assets, $590,000 of which are considered permanent current assets. In addition, the firm has $840,000 invested in capital assets. a. Lear wishes to finance all capital assets and half of its permanent current assets with long-term financing costing 10 percent Short term financing currently costs 5 percent. Lear's earnings before interest and taxes are $440,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. Earnings after taxes b....
Guardian Inc us trying to develop an asset-financing plan. The firm has $400,000 tenporary current assets...
Guardian Inc us trying to develop an asset-financing plan. The firm has $400,000 tenporary current assets and 300,000 in permanent current assets. Guardian also has $500,000 in fixed assets. Assume a tax rate od 40 percent. a. Constrct two alternative financing plans for Guardian. One of the plans should be conservative, with 75 percent of assets financed by long-term sources, and the other should be aggressive, with only 56.25 percent of assets financed financed bt lond-term sources. The current interest...
5. Colter Steel has $4,950,000 in assets. Temporary current assets $ 1,900,000 Permanent current assets...
5. Colter Steel has $4,950,000 in assets. Temporary current assets $ 1,900,000 Permanent current assets 1,545,000 Fixed assets 1,505,000 Total assets $ 4,950,000 Short-term rates are 9 percent. Long-term rates are 14 percent. Earnings before interest and taxes are $1,050,000. The tax rate is 40 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?
Capital assets are usually financed with Multiple Choice short-term funds. long-term funds. permanent funds self-liquidating funds
Lear Inc. has $1,020,000 in current assets, $460,000 of which are considered permanent current assets. In addition, the firm has $820,000 invested in fixed assets a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 5 percent. Lear's earnings before interest and taxes are $420,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is...
Lear Inc. has $990,000 in current assets. $445,000 of which are considered permanent current assets. In addition, the firm has $790,000 invested in fixed assets. a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 8 percent. The balance will be financed with short-term financing, which currently costs 6 percent. Lear's earnings before Interest and taxes are $390,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is...
Lear, Inc. has $1,800,000 in current assets, $750,000 of which are considered permanent current assets. In addition, the firm has $1,000,000 invested in capital assets. a. Lear wishes to finance all capital assets and half of its permanent current assets with long-term financing costing 10 percent Short- term financing currently costs 5 percent. Lear's earnings before interest and taxes are $600,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. Earnings after taxes $...
Lear, Inc. has $1,400,000 in current assets, $590,000 of which are considered permanent current assets. In addition, the firm has $840,000 invested in capital assets. a. Lear wishes to finance all capital assets and half of its permanent current assets with long-term financing costing 10 percent Short term financing currently costs 5 percent. Lear's earnings before interest and taxes are $440,000. Determine Lear's earnings after taxes under this financing plan. The tax rate is 30 percent. Earnings after taxes b....
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