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Alex777 [14]
3 years ago
8

What does it mean to adopt a maturity matching approach to financing assets, including current assets? How would a more aggressi

ve or a more conservative approach differ from the maturity matching approach, and how would each affect expected profits and risk? In general, is one approach better than the others? Use your industry for illustration.
Business
1 answer:
dlinn [17]3 years ago
6 0

Answer:

Check the following definitions

Explanation:

a. Maturity matching simply means that long term funds should be used to finance long term assets and short term funds should be used to finance short term assets.

That means, long terms funds will finance fixed assets and permanent working capital while short term funds will finance temporary working capital.

If permanent assets are financed with short term funds, then refinancing risk arises, i.e. borrower has to refinance the loan at its maturity date which is of a shorter period. On the other hand if long term funds are used to finance short term assets, then interest has to be paid for the longer period when funds are not even used.

b.

Aggressive approach :

Under the aggressive approach, the firm finances all temporary current assets and some of its permanent current assets with short-term sources of financing. This approach relies more heavily on short-term financing than the other approaches. This brings a little refinancing risk and decrease in profits as short term funds are costlier than long term funds.

Conservative approach:

Under the conservative approach, the firm finances long-term assets, all permanent current assets, and some temporary current assets with long-term sources of funds. This approach relies more heavily on long-term financing than the other approaches. This involves higher pay back period which involves more interest outflow.

c. Generally, all the approahes have their own advantages and disadvantages. The decision of chosing the approach depends on the circumstances of the entity as to requirement of funds, pay back period etc. But the maturity matching approach can be said to be better as it maintains balance between inflow and outflow of funds.

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Effects of the launching of Sputnik included:________
Genrish500 [490]

Answer:

Option D

Calls for more funding for science education in America the growth of the antiwar movement

Explanation:

Due to the cold war, the need for superiority in science and technology was created, and the U.S and Russia were the two countries running the arms race to gain superiority. When Russia launched the first rocket into space, The US responded by channeling funds into research and development. This was done in order to launch their own satellite into space as well. This was achieved a few years later with the launching of the Explorer 1

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3 years ago
One of the examples given by Agnew and Brezina as a way to reduce crime by reducing situational strains is to:
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Answer:

Reduce the amount of media violence.

Explanation:

Reducing crime reducing situational stains is the method to minimize the impact of crime and being it public. Media is the most effective way which reports details of crime very quickly. Agnew and  Brezina had tried to reduce the impact of crime and avoid distribution of details to public about the reported crime to reduce situational stains.

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2 years ago
As managers use less and different types of direct materials, which of the following standards do managers focus on to enhance s
seropon [69]

Answer:

D) Both A and B

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6 0
3 years ago
You are given the following information for O'Hara Marine Co.: sales = $75,500; costs = $35,200; addition to retained earnings =
pshichka [43]

Answer:

O'Hara Marine Co.

Depreciation Expense is:

$13,903

Explanation:

a) Data and Calculations:

sales = $75,500;

costs = $35,200;

addition to retained earnings = $9,580;

dividends paid = $8,420;

interest expense = $2,620;

tax rate = 23 percent

Net Income:

addition to retained earnings = $9,580;

dividends paid = $8,420

Total net income = $18,000

Pre-tax Income = $18,000/0.77 = $23,377

Income tax (23%) of $23,377 = $5,377

After Tax Income = $18,000 ($23,377 - 5,377)

Depreciation:

sales = $75,500

costs = $35,200

Gross profit =     $40,300

Less interest         (2,620)

Less net income  (23,777)

Depreciation =    $13,903

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pav-90 [236]

Answer:

Every time a dollar is deposited into a bank account, a bank's total reserves increases. The bank will keep some of it on hand as required reserves, but it will loan the excess reserves out. When that loan is made, it increases the money supply. This is how banks “create” money and increase the money supply.

Explanation:

6 0
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