--%>

Describe matching principle of working capital financing

Describe matching principle of working capital financing? Explain the benefits of following this principle?
The matching principle is while short-term financing is utilized for temporary current assets while long-term financing is utilized for permanent current assets & fixed assets. The basic benefit of this approach is that as temporary current assets are sold off the proceeds can be utilized to pay off the short-term debt.

   Related Questions in Finance Basics

  • Q : Influence of working capital in the

    How and why does working capital influence the incremental cash flow estimation for a proposed large capital budgeting project? Describe. Several large projects need additional working capital. This investment in additional working capital bec

  • Q : Influence the economy in short run and

    Normal 0 false false

  • Q : Role of depreciation in estimating

    What kind of role does depreciation play in estimating incremental cash flows? Depreciation expense is a tax deductible expense and therefore affects cash flow through its effect on taxes. Depreciation expense which is incremental to a proposed

  • Q : Explain Appropriated Revenue

    Appropriated Revenue: The revenue which, as it is earned is reserved and appropriated for a particular aim. An illustration is student fees received by state colleges which are by law appropriated for the support of the colleges. The

  • Q : Describe Form 22 Form 22 : It’s a

    Form 22: It’s a department’s request to transfer money to the Architectural Revolving Fund (example, for building enhancements), reviewed by the Department of Finance.

  • Q : Laffer Curveand its association to

    Normal 0 false false

  • Q : None what are the disadvantages of

    what are the disadvantages of working capital

  • Q : Security in banking operations Security

    Security in banking operations is a major problem in financial institutions all over the world today. The compromise of banking information and data more often than not leads to fraud. Fraud has become quite a challenge for many banks as any slight br

  • Q : How does preemptive right secure

    How does a preemptive right secure the interests of present stockholders? A preemptive right secure the interests of existing stockholders through giving them the chance to preempt other investors into the purchase of new shares. If these right

  • Q : How the production of public goods will

    Normal 0 false false