Explain the graph in the context of working capital management.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Explain the graph in the context of working capital management.
Risks vs. Costs Trade-Off
(Conservative Approach)
Firm can reduce risks associated with short-term borrowing
by using a larger proportion of long-term financing.
Short-term financing
Currènt assets
Long-term financing
Fixed assets
TIME
DOLLAR AMOUNT
Transcribed Image Text:Explain the graph in the context of working capital management. Risks vs. Costs Trade-Off (Conservative Approach) Firm can reduce risks associated with short-term borrowing by using a larger proportion of long-term financing. Short-term financing Currènt assets Long-term financing Fixed assets TIME DOLLAR AMOUNT
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