Importance of Approaches for Financing Current Assets Assignment Help

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About the subject:

In every organization current assets need to be financed with the use of current or long term funds. There are some major approaches through which this is done. Matching approach, conservative approach and risk-return trade off are the three most important approaches of financing current assets.

There are different types of approaches to financing current assets and the students face most problems with Matching Approach and Conservative Approach. In case of Matching or Hedging approach, a financial plan is adopted by a firm which is associated with matching the expected life of the source to fund which is used to raise assets with expected life of those assets.

On the other hand, Conservation Approach is all about the not matching of the expected life source of fund of assets with expected life of the assets. Besides these two, there is also another approach where Risk Return trade off of this third approach is involved.

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