Question

Current assets of a business firm should be financed through:
a. current liability only
b. long-term liability only
c. both types(i.e. long and short term liabilities)

Answer 1

Answer:

Current assets of a business firm should be financed through: both types(i.e. long and short term liabilities)

Among the given options option (c)  both types(i.e. long and short term liabilities) is the correct answer.

Explanation:

Current assets refer to those assets held in a business which can be converted in the form of cash within a period of one year. Current assets are more liquid but less profitable.

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Here are more questions of the same chapter :  

A fixed asset should be financed through:  

a. a long-term liability  

b. short-term liability  

c. a mix of long and short-term liabilities

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Higher dividend per share is associated with:  

a. high earnings, high cash flows, unstable earnings and higher growth opportunities.  

b. high earnings, high cash flows, stable earnings and high growth opportunities  

c. high earnings, high cash flows, stable earnings and lower growth opportunities  

d. high earnings, low cash flows, stable earnings and lower growth opportunities.

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Answer 2

Answer:

(c)

Explanation:

both (a) and (b)

current liability only and long term liability