Question

Which of the following statements is false? Because investment in permanent working capital is required so long as the firm remains in business, it constitutes a long-term investment.
Because temporary working capital represents a short-term need, the firm should finance this portion of its investment with short-term financing.
Temporary working capital is the difference between the lowest level of investment in short-term assets and the permanent working capital investment.
The matching principle states that short-term needs should be financed with short-term debt and long-term needs should be financed with long-term sources of funds.
select any one option ​

Answer 1

Answer:

The above statements are true regarding working capital management approaches,

Explanation:

The matching or hedging approach in working capital means each asset is financed with an instrument almost having the same maturity. so it is true that short-term needs should be financed with short-term debt and long-term needs should be financed with long-term sources of funds.