Jem Jewelers has seasonal financing needs that vary from P250,000 to P2,725,000. The permanent financing requirement is P4,100,000. Indicate the appropriate strategy for each situation wheter it is AGGRESSIVE FINANCING or CONSERVATIVE FINANCING. a.  Due to high inflation , short- term interest rates are much higher than long-term rates b.  Sales revenue is unpredictable c.  The firm has large proportion of fixed assets in its total assets d.  The average seasonal financing need is P1,000,000 e.   The average seasonal financing nedd is P2,000,000

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question

Jem Jewelers has seasonal financing needs that vary from P250,000 to P2,725,000. The permanent financing requirement is P4,100,000.

Indicate the appropriate strategy for each situation wheter it is AGGRESSIVE FINANCING or CONSERVATIVE FINANCING.

a.  Due to high inflation , short- term interest rates are much higher than long-term rates
b.  Sales revenue is unpredictable
c.  The firm has large proportion of fixed assets in its total assets
d.  The average seasonal financing need is P1,000,000
e.   The average seasonal financing nedd is P2,000,000

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education