Question

Comfin Company has the following estimates on its level of current and total assets for the next two years (presented in text):
a. Estimate the levels of permanent and temporary current assets for Comfin over these months. Find the average amount for fixed assets, permanent current assets, and temporary current assets in year 201X and year 201X+1.
b. What average amounts of short-term and long-term financing should Comfin have during each year if it wanted to follow a maturity-matching financing strategy over time?
c. What average amounts of short-term and long-term financing should Comfin have during each year if it wanted to follow an aggressive financing stratetgy over time?
d. Suppose Comfin’s cost of short-term funds is 8 percent and its cost of long-term funds in 15 percent. Use your answers in parts b) and c) to compute the cost of each strategy.
e. What are the pro and con arguments toward each strategy in terms of profitability, risk, and company liquidity?


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  • CreatedMarch 27, 2015
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